UPDATED: In response to this morning’s news of a reshuffle at Cyclescheme the company has told CyclingIndustry.news that this is down to an acquisition by the Blackhawk Network.
“We are really excited about the opportunities this partnership brings to Grass Roots,” said Richard Bandell, CEO of Grass Roots. “Joining Blackhawk opens up significant growth opportunities for Grass Roots, transforming us into a leading global business and allowing us to inspire more people worldwide. Together, the two companies will have increased scale and scope, and we will bring those benefits to our clients and partners.”
“The acquisition of Grass Roots complements the existing client portfolio of Blackhawk’s incentives business, and enhances solutions for customers requiring global reward and incentive platforms and products,” said Bill Tauscher, executive chairman of Blackhawk. “We will also offer new products and capabilities to Grass Roots’ clients.”
Previously an affiliate of WPP, Grass Roots will operate as a subsidiary of Blackhawk. Matthew Howe and Jonathan Kenny, co-managing directors of Blackhawk’s UK-based Europe operations, will lead the European operations of Grass Roots. Stewart Rigby, managing director, Blackhawk Asia Pacific, will lead the Asia-Pacific operations of Grass Roots.
Details of the acquisition are yet to be disclosed, though documents filed earlier this month show Cyclescheme’s founding members have stepped down from the board of directors.
Directors Richard Grigsby, Gary Cooper, Paul Ashley and Gary Mervin have made way for a new panel. Daniel Gilborn and Andrew William Lister have remained on the board. Those joining are Kirsten E.Richesson, Matthew Howe, Adrian Warren, Jonathan Kenny and Patrick Gurney.
Having sold the Cyclescheme business to the Grass Roots Group in 2010, the business has continued to generate profits despite what many saw a dilution of the scheme’s value. The same year HMRC revised ‘fair market value’ guidance for those bikes bought as part of the salary sacrifice scheme. The result of this change saw cost savings slide for the buyer and the Cycle To Work Alliance at the time strongly urged the treasury to reconsider.
Earlier this year dealers reacted with dismay at the announcement that commission taken on parts and accessories sales would rise, something which, on behalf of struggling bike shops, the ACT publicly called on the group to rethink. With a July 10th deadline to sign new contracts, a number of dealers protested at the erosion of their margin and refused to sign on the dotted line.
In the year to December 31st, 2015, Cyclescheme’s turnover decreased by 1.7% to £57 million. This hasn’t dented profits, however, with the business increasing its gross profit by 6% to 8.3 million and operating profit up 8.5% to £5.6 million. Dividends paid during 2015 amounted to £5,393,000, up £893,000 year-on-year.
Having sold 641,000 bikes to date, the leading facilitator of the Cycle to Work scheme has come under increasing competition in recent times and will no doubt be aware that Halfords earlier acquisition of Tredz and Wheelies Direct will likely result in an attempted market share grab.
Thankfully for those bike dealers still boasting strong cycle to work sales, a rumour on a potential canning of the scheme proved unfounded, with the chancellor leaving the legislation untouched in the 2016 budget.
With that in mind, Cyclescheme has been working toward adding value to its 2,000 strong dealerbase, earlier this year outlining an online learning tool for store staff to better understand the C2W sales process.
The scheme has been widely credited with allowing dealers to raise their average sale price in most instances, which with given the UK’s struggles to match European neighbours, can only be a good thing.
CyclingIndustry.News has reached out to Cyclescheme for further comment on the changes.