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Registered number: 02358344










HARLEY-DAVIDSON EUROPE LIMITED










ANNUAL REPORT AND FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2022



 
HARLEY-DAVIDSON EUROPE LIMITED
 

COMPANY INFORMATION


Directors
K Rebstock 
V Williams (appointed 21 April 2023)
G Fallon (appointed 25 July 2023)
P Sweeney (resigned 21 April 2023)




Company secretary
A Gatha (appointed 5 June 2023)



Registered number
02358344



Registered office
Oxford Business Park
6000 Garsington Road

Oxford

Oxfordshire

OX4 2DQ

United Kingdom




Independent auditor
Ernst & Young LLP

Statutory auditor

R+2 Blagrave Street

Reading

Berkshire

RG1 1AZ




Bankers
JPMorgan Chase Bank N.A.
25 Bank Street

London

E14 5JP




Solicitors
Covington & Burling LLP
265 Strand

London

WC2R 1BH





 
HARLEY-DAVIDSON EUROPE LIMITED
 

CONTENTS



Page
Strategic report
1 - 3
Directors' report
4 - 7
Directors' responsibilities statement
8
Independent auditor's report
9 - 12
Statement of comprehensive income
13
Statement of financial position
14
Statement of changes in equity
15
Notes to the financial statements
16 - 30


 
HARLEY-DAVIDSON EUROPE LIMITED
 

STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022

Principal activity
 
The principal activity of the Company continues to be the importation, distribution, and marketing of motorcycles, together with the associated parts, accessories and other products under the Harley Davidson brand and other marks registered by the parent undertaking. For the full year, the area of operation included the UK and Republic of Ireland, most major European markets and parts of the Middle East and Africa.

Review of the business and future developments
 
Harley Davidson Europe Limited continues to operate directly in the UK and Ireland, and through six Limited Risk Distributors appointed to cover the markets of France, Germany and Austria, Italy, Benelux, Switzerland and Spain. These Limited Risk Distributors are sister companies of Harley Davidson Europe Limited, with the ultimate parent undertaking being Harley Davidson Inc.
Except for the above markets, sales to other markets in Europe, the Middle East and Africa are arranged through a network of independent distributors and dealers which are supported from the UK head office.
The directors consider the results to be satisfactory, recognising the continuing volatile economic environment and its impact upon retail behaviour of discretionary spend on premium products. The directors continue to be committed to profitable and stable operations within our markets in Europe, the Middle East and Africa, through the development of the dealer network and investment in other sales and marketing activities.
During the year, the Company continued to experience disruption and increased costs related to global supply chain challenges. As a result of these challenges, the Company experienced higher costs as well as supply constraints related to certain components including those impacted by the continued global semiconductor chip shortages.
The Company's key performance indicators during the year were as follows: 
         2022    2021    Change
    €’000    €’000   %
Turnover         613,184   550,643    11
Gross Profit    35,209    43,061  -18
Profit before tax           1,884               8,884                  -79
The year on year increase in turnover was primarily driven by increased pricing, in addition to freight surcharges and a 2.6% increase in motorcycle wholesale volume. This was offset by a change in the mix of motorcycles as a result of increased sales of the lower priced Revolution Max family and lower sales of the higher priced Softail family. The increase in turnover was also partially driven by a 23% increase in general merchandise and 6% increase in parts and accessories. 
Gross Profit reduced by 18% year-on-year due to increased sales of the lower margin Revolution Max family and reduced sales of the higher margin Softail family. Gross Profit was also impacted by inventory obsolescence increase of €10M, relating to the Company's stock of electric bicycles.
The reduction in Profit before tax is mainly due to the reduction in Gross Profit discussed above and foreign exchange losses relating to weakening of GBP, EUR and RUB currencies during the year. This has been offset partially by a reduction in Distribution expenses as a result of reduced marketing and advertising activities.

Page 1

 
HARLEY-DAVIDSON EUROPE LIMITED
 

STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022

Principal risks and uncertainties

The Company's directors monitor risks and uncertainties facing the Company. The main risks are considered to
be :
Competitive risk
The heavyweight motorcycle market is highly competitive. Competition in the heavyweight motorcycle market is
based upon a number of factors, including price, quality, reliability, styling, product features, consumer
preference and warranties. The Company emphasises quality, reliability and styling in its products and offers a
two-year warranty for its motorcycles. The Company sells its products at wholesale and must rely on a network
of independent dealers and distributors to manage the retail distribution of its products.
Credit risk
The Company's financial operations are exposed to credit risk on its trade debtors. Credit risk is the risk of loss
arising from a failure by a customer to meet the terms of any contract with the Company. Credit losses are
influenced by general business and economic conditions, as well as contract terms, customer credit profiles
and the new and used motorcycle market. Policies are aimed at minimising such losses through credit
monitoring procedures.
Exchange risk
The Company is exposed to movements in the Sterling/Euro and USD/Euro exchange rates given that many of
the administrative and payroll costs and UK dealer revenues are denominated in Sterling.
Political risk
Tariffs and other developments with respect to trade policies, trade agreements, and government regulations
could have a material adverse impact on the Company's business.
The ongoing conflict between Russia and Ukraine could adversely affect the Company's business, financial
condition and operating results. While the Company has not experienced any material interruptions to its
infrastructure, supplies, technology systems or networks needed to support its operations or significant costs
due to the conflict, the Company cannot provide assurance that will remain the case. The Company has
suspended its business in Russia.
Global economy
Changes in general economic and business conditions, tightening of credit and retail markets or other factors, such as increasing rates, may adversely impact dealers’ retail sales. The motorcycle industry is impacted by general economic conditions over which the Company has little control. These factors can weaken the retail environment and lead to weaker demand for discretionary purchases, such as the Company's motorcycles. Weakened economic conditions in certain business sectors and geographic areas can also result in reduced demand for the Company's products.
Environmental and legislative risk
Many of the Company's products are subject to statutory and regulatory requirements governing emissions, noise and other matters in the countries where the Company’s products are sold. Any significant change to the regulatory requirements governing emissions and noise may substantially increase the cost of the Company’s products. If the Company fails to meet existing or new requirements, then the Company may be unable to produce and sell certain products or may be subject to fines or penalties.

Page 2

 
HARLEY-DAVIDSON EUROPE LIMITED
 

STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022


This report was approved by the board and signed on its behalf.





V Williams
Director

Date: 4 October 2023

Page 3

 
HARLEY-DAVIDSON EUROPE LIMITED
 

 
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022

The directors present their report and the financial statements for the year ended 31 December 2022.

Results and dividends

The profit for the year, after taxation, amounted to 1,795,000 (2021: 7,314,000).

There were no dividend payments in 2022 (2021: €32,250,000).

Directors

The Directors who served during the year were:

K Rebstock 
P Sweeney (resigned 21 April 2023)

Going concern

The Company’s business activities, together with the factors likely to affect its future development and principal risks and uncertainties are described in the Strategic report.
The Company is dependent upon its ultimate parent company, Harley Davidson Inc., for both product supply and cash resources. In view of this, the Directors have confirmed that Harley Davidson Inc. guarantees to make funds available to the Company to enable it to meet its liabilities as they fall due for a period at least until 31st December 2024.
After considering these factors, including the financial and operational ability of the ultimate parent company to continue as a going concern, the Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. No material uncertainties that could cast significant doubt about the ability of the company to continue as a going concern have been identified. Accordingly, they continue to adopt the going concern basis in preparing the annual report and accounts.
The financial statements of Harley-Davidson Inc. are publicly available, see note 24.

Payment to suppliers

The Company views that disclosure of average creditor days is not meaningful, since 80% of purchases are made from intercompany suppliers.
The Company agrees terms and conditions for its business transactions with third party suppliers. Payment is then made on these terms, subject to the terms and conditions being met by the supplier.

Page 4

 
HARLEY-DAVIDSON EUROPE LIMITED
 

 
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022

Engagement with suppliers, customers and others

Section 172(1) statement
The Company directors, in line with their duties under s172 of the Companies Act 2006, act in a way they consider would be most likely to promote the success of the Company for the benefit of its members as a whole. They consider the impact that any material decision will have on all relevant stakeholders to ensure that it is making a decision that promotes the long-term success of the Company. The directors are members of the Company’s EMEA Leadership Team which meets weekly and is collectively responsible for ensuring that the Company’s operations are aligned to our internal values and to focus on the short and long term strategically important decisions and activities of the Company. This includes how the Company will act fairly and engage with all key stakeholders.
Stakeholder’s Engagement
The directors have considered which parties should be deemed to be stakeholders of the Company. The key stakeholders are our dealers, riders, employees, community, and service providers. The section below discusses why these stakeholders are considered of importance to the Company and the actions taken to ensure that their interests are considered.
Dealers
Working with our dealers is a crucial part of our stakeholder engagement across EMEA. We conduct regular meetings with our Dealer Advisory Council (DAC) where we share ideas and listen to feedback. Meetings are chaired by the Vice President and Managing Director of EMEA and selected meetings are attended by board members from Harley Davidson Inc., including the CEO. Members’ views and feedback from the meeting are taken and shared via detailed minutes.
Riders
Supporting and nurturing our existing and new riding communities is vital to the ongoing engagement of our riders. This work focuses on the entertainment of this riding community from the country level up to international events such as the ‘European rally’ which occurs each year in a different European location and is open to all members of the public. We also host the open rider event ‘European Bike Week’, in the Corinthian region of Austria which can attract over 70,000 riders per year.
The feedback of our existing and prospective riders is important to us and collected through a variety of methods including through the dealer network, customer experience surveys and events detailed above.
Employees
We are committed to building an inclusive, engaging work environment. Our goal is to encourage, value and leverage differences in people and perspectives to maximise business outcomes. Diversity and inclusion is a business imperative that aligns with our mission and values.
The Company and directors use a diverse range of methods for communicating with employees to provide them with relevant information and to obtain their views, which are then considered when making decisions which are likely to affect their interests. Such methods include informal meetings, email communications, surveys, management team meetings and regular “town halls.” These help to ensure that employees are kept fully informed about developments in the Company which directly affect employees, including the Company’s financial and operating performance.
The Company introduced hybrid working for all previously office-based employees following the COVID-19 pandemic. The hybrid working arrangement allows for a flexible way of working, with a blend of working on-site and remotely, that suits the needs of both the employee and the company.
Community
We are committed to giving back to our community and provide financial support to Trax, a charity which aims to divert young people away from anti-social behaviour, crime and negative activities and encourage personal, social, and educational development, and to Maggie’s cancer support charity.
 
Page 5

 
HARLEY-DAVIDSON EUROPE LIMITED
 

 
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022


Service providers
We ensure that the impact on our service suppliers is fully considered and understood before any business decision is made. Our key suppliers are important to enable us to deliver a high quality service to our customers. Maintaining a close and constructive working relationship with our key suppliers is crucial and we aim to treat our suppliers fairly, including paying them within agreed timelines.

Streamlined Energy and Carbon Reporting Framework

Annual UK energy use (in kWh)
Natural Gas    Consumption: 298,984 kWh
Electricty         Consumption: 351,314 kWh
Transport        Consumption: 108,990 kWh
Scope 1 GHG emissions: 54.6 tCO2e
Scope 2 GHG emissions: 67.9 tCO2e
Scope 1 GHG emissions: 27.3 tCO2e
Emission intensity ratio
1.61 tCO2e per employee
[Scope 1+2 tCO2e dividend by 93, the average number of HDE employees for CY2021]
Methodologies used
Actual consumption data per invoices
Scope 1 & 2 GHG emissions calculated using applicable emissions factors from the UK Government GHG Conversion Factors for Company Reporting for 2022 (Jan 2023), specifically the CO2e emissions factors for natural gas and for UK electricty


In 2022 the Company continued to take measures to reduce energy consumption. The company has transitioned to a virtual first approach to working and as a result employees now have the flexibility to work remotely which has resulted in a maximum of no more than 50% of workforce on site at any time, therefore reducing energy usage.



Directors’ indemnities

The Company has made qualifying third party indemnity provisions for the benefit of its directors which were made during the year and remain in force at the date of this report.

Disclosure of information to auditor

Each of the persons who are directors at the time when this Directors' report is approved has confirmed that:
• so far as the director is aware, there is no relevant audit information of which the Company's auditor is         unaware, and the director has taken all the steps that ought to have been taken as a director in order to be aware of any relevant audit information and to establish that the Company's auditor is aware of that information.
 

Page 6

 
HARLEY-DAVIDSON EUROPE LIMITED
 

 
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022


Post balance sheet events

Since the end of the fiscal year no events have occurred that are of material importance and could have a significant impact on the results of the operations, financial position, and net assets of the business.

Auditor

The auditor, Ernst & Young LLPwill be proposed for reappointment in accordance with section 485 of the Companies Act 2006.

This report was approved by the board and signed on its behalf.
 





V Williams
Director

Date:4 October 2023

Page 7

 
HARLEY-DAVIDSON EUROPE LIMITED
 

DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2022

The directors are responsible for preparing the Strategic report, the Directors' report and the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period.

 In preparing these financial statements, the directors are required to:

select suitable accounting policies for the Company's financial statements and then apply them consistently;

make judgments and accounting estimates that are reasonable and prudent;

state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;

prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and to enable them to ensure that the financial statements comply with the Companies Act 2006They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The company is committed to ensuring our operations and supply chains are free from involuntary labour and human trafficking. The commitment applies to all of the Company's employees, officers and directors as well as all individuals and entities doing business with and for the Company.

Page 8

 
HARLEY-DAVIDSON EUROPE LIMITED
 

 
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF HARLEY-DAVIDSON EUROPE LIMITED
 

Opinion


We have audited the financial statements of Harley-Davidson Europe for the year ended 31 December 2022, which comprise the Statement of Comprehensive Income, the Statement of Financial Position, the Statement of Changes in Equity  and the related notes 1 to 24, including a summary of significant accounting policiesThe financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).


In our opinion the financial statements:


give a true and fair view of the company's affairs as at 31 December 2022 and of its profit for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.


Basis for opinion


We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. 
 
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.


Conclusions relating to going concern


In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.


Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Company's ability to continue as a going concern for a period to 31 December 2024.


Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report. However, because not all future events or conditions can be predicted, this statement is not a guarantee as to the company’s ability to continue as a going concern.


Page 9

 
HARLEY-DAVIDSON EUROPE LIMITED
 

 
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF HARLEY-DAVIDSON EUROPE LIMITED (CONTINUED)


Other information


The other information comprises the information included in the Annual Report other than the financial statements and  our Auditor's report thereon.  The directors are responsible for the other information contained within the Annual Report
Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in this report, we do not express any form of assurance conclusion thereon. 
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated.  If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves.  If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.


We have nothing to report in this regard.


Opinions on other matters prescribed by the Companies Act 2006
 

In our opinion, based on the work undertaken in the course of the audit:


the information given in the Strategic report and the Directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the Strategic report and the Directors' report have been prepared in accordance with applicable legal requirements.


Matters on which we are required to report by exception
 

In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic report or the Directors' report.


We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:


adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors' remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.


Responsibilities of directors
 

As explained more fully in the Directors' responsibilities statement set out on page 8, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.


In preparing the financial statements, the directors are responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.


Page 10

 
HARLEY-DAVIDSON EUROPE LIMITED
 

 
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF HARLEY-DAVIDSON EUROPE LIMITED (CONTINUED)


Auditor's responsibilities for the audit of the financial statements
 

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an Auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.


Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect irregularities, including fraud. The risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.  The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below. However, the primary responsibility for the prevention and detection of fraud rests with both those charged with governance of the entity and management. 

Our approach was as follows:
• We obtained an understanding of the legal and regulatory frameworks that are applicable to the company and determined that the most significant are those that relate to the reporting framework (FRS 102 and the Companies Act 2006) and compliance with the relevant direct and indirect tax regulations in the United Kingdom. In addition, the company has to comply with operational and employment laws and regulations, including health and safety regulations, and GDPR.  
• We understood how Harley-Davidson Europe Limited is complying with those frameworks by making enquiries of senior finance personnel, those charged with governance and gaining an understanding of the entity level controls of the company in respect of these areas and the controls in place to reduce the opportunities for fraudulent transactions. 
• We assessed the susceptibility of the company’s financial statements to material misstatement, including how fraud might occur through internal team discussions and inquiry of management and those charged with governance. We considered the procedures and controls that the company has established to address the risk identified, or otherwise prevent, deter and detect fraud and gained an understanding as to how those procedures and controls are implemented and monitored. Through these procedures we determined there to be a risk of management override and a fraud risk around revenue recognition and in particular overstatement of revenue recognition around the year end date. We selected a sample of revenue transactions around the year end date and performed detailed testing, including agreeing to source documentation to validate that the revenue had been recognised in the appropriate period. In relation to management override to the posting of non-standard manual journals, including non-standard journals to revenue, we used data analytics to sample from the entire population of journals, identifying specific transactions which did not meet our expectation based on specific criteria which we investigated further to gain an understanding of the transaction and agree to source documentation ensuring appropriate authorisation of the transaction. 
• Based on this understanding we designed our audit procedures to identify noncompliance with such laws and regulations. Our procedures involved verifying material transactions are recorded in compliance with FRS 102 and where appropriate the Companies Act 2006. Compliance with other operational laws and regulations was covered through inquiries with management, those charged with governance and with internal counsel. We also read board minutes and the company’s correspondence with relevant authorities. 


A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditor's report.


Page 11

 
HARLEY-DAVIDSON EUROPE LIMITED
 

 
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF HARLEY-DAVIDSON EUROPE LIMITED (CONTINUED)


Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006.  Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor’s report and for no other purpose.  To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.  




  
David Brown (Senior statutory auditor)
 
for and on behalf of Ernst & Young LLP, Statutory Auditor
R+2 Blagrave Street
Reading
Berkshire
RG1 1AZ

5 October 2023
Page 12

 
HARLEY-DAVIDSON EUROPE LIMITED
 

STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2022

2022
2021
Note
€000
€000

  

Turnover
 3 
613,184
550,643

Cost of sales
  
(577,975)
(507,582)

Gross profit
  
35,209
43,061

Distribution costs
  
(6,592)
(8,673)

Administrative expenses
  
(26,172)
(25,073)

Operating profit
 4 
2,445
9,315

Interest receivable and similar income
 7 
110
43

Interest payable and similar expenses
 8 
(671)
(474)

Profit before tax
  
1,884
8,884

Tax on profit
 9 
(89)
(1,570)

Profit for the financial year
  
1,795
7,314

Other comprehensive income for the year
  
-
-

  

Total comprehensive income for the year
  
1,795
7,314

The notes on pages 16 to 30 form part of these financial statements.

Page 13

 
HARLEY-DAVIDSON EUROPE LIMITED
REGISTERED NUMBER: 02358344

STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2022

2022
2021
Note
€000
€000

Fixed assets
  

Tangible assets
 11 
372
270

Current assets
  

Stocks
 12 
64,612
40,039

Debtors: amounts falling due within one year
 13 
86,879
132,360

Cash at bank and in hand
 14 
41,811
37,820

  
193,302
210,219

Creditors: amounts falling due within one year
 15 
(131,301)
(152,310)

Net current assets
  
62,001
57,909

Long - term assets
 13 
2,896
2,896

Total assets less current liabilities
  
65,269
61,075

Creditors: amounts falling due after more than one year
 16 
(12,000)
(11,041)

Provisions for liabilites
 18 
(7,154)
(5,714)

  
(7,154)
(5,714)

Net assets
  
46,115
44,320


Capital and reserves
  

Called up share capital 
 19 
-
-

Capital reserves
  
31,776
31,776

Retained earnings
  
14,339
12,544

  
46,115
44,320


The financial statements were approved and authorised for issue by the board and were signed on its behalf by 




V Williams
Director

Date:4 October 2023

The notes on pages 16 to 30 form part of these financial statements.

Page 14

 
HARLEY-DAVIDSON EUROPE LIMITED
 

STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022


Capital reserves
Retained earnings
Total equity

€000
€000
€000


At 1 January 2021
31,776
37,480
69,256



Profit for the year
-
7,314
7,314

Dividends: Equity capital                                                         10
-
(32,250)
(32,250)



At 1 January 2022
31,776
12,544
44,320



Profit for the year
-
1,795
1,795


At 31 December 2022
31,776
14,339
46,115


The notes on pages 16 to 30 form part of these financial statements.

Page 15

 
HARLEY-DAVIDSON EUROPE LIMITED
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

1.


General information

Harley-Davidson Europe Limited is a private company, limited by shares, registered in England and Wales. The Company's registered number and registered office address can be found on the Company Information page.

2.Accounting policies

 
2.1

Basis of preparation of financial statements

Harley-Davidson Europe Limited is a company incorporated in the United Kingdom under the Companies Act.

The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.

The financial statements are prepared in Euros which is the functional currency of the Company. As explained in the Directors' Report, the directors believe it appropriate to continue to adopt the going concern basis in preparing the financial statements.

 
2.2

Going concern

The Company’s business activities, together with the factors likely to affect its future development and principal risks and uncertainties are described in the Strategic report.
The Company is dependent upon its ultimate parent company, Harley Davidson Inc., for both product supply and cash resources. In view of this, the Directors have confirmed that Harley Davidson Inc. guarantees to make funds available to the Company to enable it to meet its liabilities as they fall due for a period at least until 31st December 2024.
After considering these factors, including the financial and operational ability of the ultimate parent company to continue as a going concern, the Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. No material uncertainties that could cast significant doubt about the ability of the company to continue as a going concern have been identified. Accordingly, they continue to adopt the going concern basis in preparing the annual report and accounts.
The financial statements of Harley-Davidson Inc. are publicly available, see note 24.

Page 16

 
HARLEY-DAVIDSON EUROPE LIMITED
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

2.Accounting policies (continued)

  
2.3

Financial reporting standard 102 - reduced disclosure exemptions

The Company has taken advantage of the following disclosure exemptions in preparing these financial statements, as permitted by the FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland":
• the requirements of Section 7 Statement of Cash Flows;
• the requirements of Section 3 Financial Statement Presentation paragraph 3.17(d);
• the requirements of Section 11 Financial Instruments paragraphs 11.42, 11.44 to 11.45, 11.47,
  11.48(a)(iii), 11.48(a)(iv), 11.48(b) and 11.48(c);
• the requirements of Section 12 Other Financial Instruments paragraphs 12.26 to 12.27, 12.29(a),
  12.29(b) and 12.29A;
• the requirements of Section 33 Related Party Disclosures paragraph 33.7.
This information is included in the consolidated financial statements of Harley-Davidson Inc. as at 31 December 2022 and these financial statements may be obtained from 3700 W Juneau Avenue, PO Box 653, Milwaukee, WI 53201.
 

  
2.4

Tangible fixed assets

Tangible fixed assets are stated at cost less accumulated depreciation and accumulated impairment losses. Cost comprises the aggregate amount paid and the fair value of any other consideration given to acquire the asset and includes costs directly attributable to making the asset capable of operating as intended.
Depreciation is provided on all tangible fixed assets at rates calculated to write off the cost, less estimated residual value, of each asset on a straight line basis over its estimated useful life, as follows:

             Short leasehold improvements   Shorter of 5 years or remaining useful life
           Fixtures, fittings and equipment   5 years
           Computer equipment and software 3 to 4 years

 
2.5

Turnover

Turnover comprises the value of sales (excluding VAT and Trade Discounts, relating to retrospective credits  accrued or issued in line with performance incentive plans) of goods and services in the normal course of business.
Revenue from the sale of goods is recognised when sufficient risks and rewards of ownership of the goods have passed to the buyer, usually on dispatch of the goods.

  
2.6

Impairment of non-financial assets

The Company assessed at each reporting date whether an asset may be impaired. If any indication arises the relevant asset is assessed. If the carrying amount is greater than the recoverable amount, the amount is impaired to profit or loss.

Page 17

 
HARLEY-DAVIDSON EUROPE LIMITED
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

2.Accounting policies (continued)

 
2.7

Stocks

Stocks are stated at the lower of cost incurred in bringing each product to its present location and condition and net realisable value. Provision is made for obsolete, slow-moving and defective items where appropriate.


  
2.8

Current and deferred taxation

Taxation for the year comprises current and deferred tax. Tax is recognised in the statement of comprehensive income, except to the extent that it relates to items recognised as other comprehensive income or directly in equity.
Current or deferred taxation assets and liabilities are not discounted.
Current tax is recognised at the amount of tax payable using the tax rates and laws that have been enacted or substantively enacted by the statement of financial position date.
Deferred tax is recognised in respect of all timing differences that have originated but not reversed by the statement of financial position date.
Timing differences arise from the inclusion of income and expenses in tax assessments in periods different from those in which they are recognised in financial statements. Deferred tax is measured using tax rates and laws that have been enacted or substantively enacted by the year end and that are expected to apply to the reversal of the timing difference.
Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits.

 
2.9

Warranties for products

A provision is recognised when the Company has a legal or constructive obligation as a result of a past event and it is probable that an outflow of economic benefits will be required to settle the obligation.
Product warranty costs are provided for, based upon the estimated warranty cost per unit sold. Warranty costs for Limited Risk Distributors are also funded by the Company.
The impact of the time value of money on warranty provisions is not material and therefore the provision is not discounted.

 
2.10

Foreign currency

Functional and presentation currency

The Company's functional and presentational currency is Euros.

Transactions and balances

Transactions denominated in foreign currencies are recorded in the functional currency at actual exchange rates as at the dates of the transactions. Monetary assets and liabilities denominated in  foreign currencies at the year end date are reported at the rates of exchange prevailing at that date. Any gain or loss arising from a change in exchange rates subsequent to the date of the transaction is included as an exchange gain or loss in the profit for the financial year.


Page 18

 
HARLEY-DAVIDSON EUROPE LIMITED
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

2.Accounting policies (continued)

 
2.11

Leased assets

Rentals paid under operating leases are charged to profit or loss on a straight-line basis over the lease term.

  
2.12

Pensions

Defined contribution pension plan
The Company operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate entity. Once the contributions have been paid the Company has no further payment obligations.
The contributions are recognised as an expense in the Statement of Comprehensive Income when they fall due. Amounts not paid are shown in accruals as a liability in the Statement of Financial Position. The assets of the plan are held separately from the Company in independently administered funds.

 
2.13

Interest Receivable

Finance income is accounted for on an accruals basis and credited to the Statement of Comprehensive Income when receivable.

 
2.14

Short term debtors and creditors

Short-term debtors and creditors with no stated interest rate are receivable or payable within one year and are recorded at transaction price.

 
2.15

Dividends

Equity dividends are recognised when they become legally payable. Interim equity dividends are recognised when paid. Final equity dividends are recognised when approved by the shareholders at an annual general meeting.

  
2.16

Cash-settled share based payments

The cost of cash-settled transactions is measured at fair value using an appropriate option pricing model. Fair value is established initially at the grant date and at each year end date thereafter until the awards are settled. During the vesting period a liability is recognised representing the product of the fair value of the award and the portion of the vesting period expired as at the year end date. From the end of the vesting period until settlement, the liability represents the full fair value of the award as at the year end date. Changes in the carrying amount for the liability are recognised in the Statement of Comprehensive Income for the period.

 
2.17

Cash and cash equivalents

Cash and cash equivalents comprise bank balances including cash pool assets, cash on hand and deposits held at call with banks, all of which are available on demand. Cash pool assets are repayable on demand by other group companies and shown as a current liability.

Page 19

 
HARLEY-DAVIDSON EUROPE LIMITED
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

2.Accounting policies (continued)

  
2.18

Judgements and key sources of estimation uncertainty

The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the amounts reported for assets and liabilities as at the year end date and the amounts reported for revenues and expenses during the year. However, the nature of estimation means that the actual outcomes could differ from these estimates. The following judgements have had the most significant effect on amounts recognised in the financial statements.
Taxation - Management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing of future taxable profits together with an assessment of future tax planning strategies.
Provisions - Management assesses the carrying value of debtors, stock and warranty balances based on past losses, current trading patterns and anticipated future events. Furthermore, management assess the need of providing for ongoing legal disputes on a case by case basis, also incorporating assessments of legal counsel.


3.


Turnover

An analysis of turnover by class of business is as follows:


2022
2021
€000
€000

Motorcycle Sales
481,361
431,006

Parts and accessories
127,275
115,629

Other (including Harley-Davidson European Rally)
4,548
4,008

613,184
550,643



Analysis of turnover by country of destination:

2022
€000
2021
€000

United Kingdom

57,206

48,082

Rest of Europe

523,467

475,547

Rest of the World

32,511

27,014


613,184

550,643


Page 20

 
HARLEY-DAVIDSON EUROPE LIMITED
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

4.


Operating profit

The operating profit is stated after charging:

2022
2021
€000
€000

Depreciation
254
434

Exchange loss/(gain)
3,153
(990)

Other operating lease rentals

 - Land and buildings
2,050
1,031

- Motor vehicles
72
65

Auditors' remuneration

 - Audit fees
174
106

Warranty expenses
6,463
4,096

Restructuring (credit)/cost
-
(30)

Dilapidations
769
-


5.


Employees

Staff costs, including directors' remuneration, were as follows:


2022
2021
€000
€000



Wages and salaries
9,223
9,006

Social security costs
846
754

Restricted stock units
887
925

Cost of defined contribution scheme
594
500

11,550
11,185

The average monthly number of employees, including the directors, during the year was as follows:

2022
2021
€000
€000



Sales and administration
93
87

Page 21

 
HARLEY-DAVIDSON EUROPE LIMITED
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

6.


Directors' remuneration

2022
2021
€000
€000

Directors' emoluments
333
242

Company contributions to defined contribution pension schemes
28
23

361
265


During the year retirement benefits were accruing to no directors (2021 - NIL) in respect of defined contribution pension schemes.

The highest paid director received remuneration of 333,000 (2021: €242,000).

The value of the Company's contributions paid to a defined contribution pension scheme in respect of the highest paid director amounted to 28,000 (2021: €23,000).


7.


Interest receivable and similar income

2022
2021
€000
€000


Other interest receivable
110
43

110
43


8.


Interest payable and similar expenses

2022
2021
€000
€000


Bank interest payable
120
180

Interest payable - intercompany
551
294

671
474

Page 22

 
HARLEY-DAVIDSON EUROPE LIMITED
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

9.


Taxation


2022
2021
€000
€000

Corporation tax


Current tax on profits for the year
374
1,802


Total current tax
374
1,802

Deferred tax


Origination and reversal of timing differences
(285)
(232)

Total deferred tax
(285)
(232)


Taxation on profit on ordinary activities
89
1,570

Factors affecting tax charge for the year

The tax assessed for the year is the same as (2021 - the same as) the standard rate of corporation tax in the UK of 19% (2021 - 19%) as set out below:

2022
2021
€000
€000


Profit on ordinary activities before tax
1,884
8,884


Profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 19% (2021 - 19%)
358
1,688

Effects of:


Expenses not deductible for tax purposes, other than goodwill amortisation and impairment
4
1

Capital allowances for year in excess of depreciation
18
46

Adjustments to tax charge in respect of prior periods
(262)
(41)

Other timing differences
256
-

Other differences leading to an increase (decrease) in the tax charge
(285)
(124)

Total tax charge for the year
89
1,570

Page 23

 
HARLEY-DAVIDSON EUROPE LIMITED
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
 
9.Taxation (continued)


Factors that may affect future tax charges

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period when the asset is realised of the liability is settled, based on the tax rates that have been enacted or substantively enacted at the balance sheet date.
The main rate of corporation tax will rise from 19% to 25% from 01 April 2023. On this basis deferred tax is provided at the future rate of 25%.


10.


Dividends

2022
2021
€000
€000


Dividends
-
32,250

-
32,250


11.


Tangible fixed assets





Freehold property
Motor vehicles
Fixtures and fittings
Computer equipment
Total

€000
€000
€000
€000
€000



Cost


At 1 January 2022
4,453
27
2,546
957
7,983


Additions
335
-
-
42
377


Disposals
-
-
(24)
-
(24)



At 31 December 2022

4,788
27
2,522
999
8,336



Depreciation


At 1 January 2022
4,426
27
2,350
910
7,713


Charge for the year on owned assets
78
-
148
28
254


Disposals
-
-
(3)
-
(3)



At 31 December 2022

4,504
27
2,495
938
7,964



Net book value



At 31 December 2022
284
-
27
61
372



At 31 December 2021
27
-
196
48
271

Page 24

 
HARLEY-DAVIDSON EUROPE LIMITED
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

           11.Tangible fixed assets (continued)




The net book value of land and buildings may be further analysed as follows:


2022
2021
€000
€000

Freehold
284
27

284
27



12.


Stocks

2022
2021
€000
€000

Motorcycles
33,136
17,567

Parts and accessories
31,476
22,472

64,612
40,039


2022
2021
€000
€000



Cost of stocks recognised as an expense (included in cost of sales)
514,127
410,735

Write down of stock to net realisable value is included in cost of stocks recognised as an expense, €10,881,000 in 2022 (€543,000 in 2021). 


13.


Debtors

2022
2021
€000
€000

Due after more than one year

Other debtors
2,896
2,896


2022
2021
€000
€000

Due within one year

Trade debtors
26,280
21,392

Amounts owed by group undertakings
56,281
108,183

Other debtors
2,828
1,679

Prepayments and accrued income
709
610

Deferred taxation
781
496

86,879
132,360


Page 25

 
HARLEY-DAVIDSON EUROPE LIMITED
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

14.


Cash and cash equivalents

2022
2021
€000
€000

Cash at bank and in hand
41,811
37,820

41,811
37,820



15.


Creditors: amounts falling due within one year

2022
2021
€000
€000

Trade creditors
6,110
5,962

Amounts owed to group undertakings
113,497
131,327

Other taxation and social security
463
1,302

Accruals and deferred income
11,231
13,719

131,301
152,310


Amounts owed to group undertakings include cash pool loans of €42,972,000 in 2022 repayable on demand to other group companies (2021 €107,426,000).


16.


Creditors: amounts falling due after more than one year

2022
2021
€000
€000

Other creditors
1,817
1,135

Accruals and deferred income
10,183
9,906

12,000
11,041


Accruals and deferred income include deferred income for life-time subscription memberships that extend beyond 1 year from the reporting date and long-term duty payable. Other creditors include a provision for Restricted Stock Units with vesting dates from 2023 onwards.
As the period in which these fall due is more than 1 year from the reporting date, the items are considered to be non-current and are therefore disclosed as such.

Page 26

 
HARLEY-DAVIDSON EUROPE LIMITED
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

17.


Deferred taxation






2021
€000






At beginning of year
496


Deferred tax credit in profit and loss account
285



At end of year
781

The deferred tax asset is made up as follows:

2022
2021
€000
€000


Accelerated capital allowances
64
125

Other short-term timing differences
717
371

781
496


18.


Provisions for liabilities

2022
2021
€000
€000
Provision for warranties

5,974

5,304
 
Provisions for dilapidations

1,179

410
 
7,153

5,714
 

Warranty Provision 
      €000

Balance at 1 January 2021

5,304

Initial Provision: 2022 sales

5,586

Utilised: 2022 sales

(1,304)

Utilised: prior years sales

(3,612)


5,974


All new motorcycles are sold with a two year manufacturer's warranty as standard. A provision is recognised at the point of sale, reflecting the average expected costs to fulfil the warranty obligations, based on management assessment of past claims and current expectations. Parts, accessories and Motorclothes® products also derive warranty obligations and are accounted for in a corresponding way.

Page 27

 
HARLEY-DAVIDSON EUROPE LIMITED
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022


Dilapidations 
Provision
      €000

Balance at 1 January 2022

410

Provision increases in the year

769

Utilised in the year

-


1,179


Dilapidations provision comprises amounts for the Company's office in Oxford and the European distribution centre in Belgium. Provision movement in the year relates to an increase in the provision for the Oxford office.


19.


Share capital

2022
2021
Allotted, called up and fully paid



100 (2021 - 100) Ordinary shares of £1.00 each
136
136


Page 28

 
HARLEY-DAVIDSON EUROPE LIMITED
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

20.


Share-based payments

The details reported below relate to Harley-Davidson Inc. restricted stock units.
Restricted stock units
The Company has a stock compensation plan under which it may grant equity awards including Restricted Stock Units (RSUs).
RSUs issued under the plan vest over three years and are settled in cash upon vesting. The cash payment at settlement for each RSU is equal to the market price of one share of Harley-Davidson Inc. common stock. The Company maintains a liability for all unvested RSUs and dividend equivalents are paid on all unvested RSUs.
The following table includes award activity during 2022 and 2021.


RSUs No. 2022
RSUs No. 
2021

Outstanding at the beginning of the year

45,377

39,940

Granted during the year

48,463

32,379

Cancelled/Transferred during the year

(6,721)

(12,945)

Vested & exercised during the year

(23,538)

(13,397)

Outstanding at the end of the year
63,581

45,977




Period-end weighted-average fair value of      $42             $37  
awards granted during the period
The fair value of RSUs is equivalent to the market price of Harley-Davidson Inc. common stock on the grant date.


21.


Pension commitments

The Company operates a defined contribution pension scheme for its employees. The assets of the scheme are held separately from those of the Company in an independently administered fund. Contributions charged to the Statement of Comprehensive Income amounted to €594,000 (2021: €510,000). At the Year-end €92,000 was accrued (2021: €80,000).

Page 29

 
HARLEY-DAVIDSON EUROPE LIMITED
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

22.


Leasing agreements

At 31 December 2022 the Company had future minimum lease payments due under non-cancellable operating leases for each of the following periods:

2022
2021
€000
€000


Not later than 1 year
1,966
1,957

Later than 1 year and not later than 5 years
3,896
5,870

5,862
7,827


23.


Related party transactions

The Company has taken advantage of the exemption available under section 33.1a of FRS 102: Related Party Disclosures and accordingly has not disclosed transactions with wholly owned members of the Harley-Davidson Inc. group. There are no other related party transactions.


24.


Parent and ultimate parent undertaking

The immediate parent company is Harley-Davidson Holding Co., Inc. The ultimate parent company is Harley-Davidson Inc., incorporated in the state of Wisconsin, USA, which heads up the largest group in which the results of the Company are consolidated. The consolidated accounts of this company are available to the public and may be obtained from 3700 W Juneau Avenue, PO Box 653, Milwaukee, WI 53201, USA.

Page 30