Annual Report • Feb 16, 2015
Annual Report
Open in ViewerOpens in native device viewer
Weidekampsgade 16 2300 Copenhagen S. Denmark Phone +45 35 44 88 00 Fax +45 35 44 88 11
SIMCORP SVERIGE AB Jacobsbergsgatan 22 111 44 Stockholm Sweden Phone +46 8 528 015 00 Fax +46 8 528 015 15
Biskop Gunnerusgate 14A 0051 Oslo Norway Phone +47 23 10 41 00 Fax +47 23 10 41 49
Fax +358 9685 2012 SIMCORP UKRAINE LLC
SimCorp Central Europe SIMCORP GMBH Justus-von-Liebig-Straße 1 61352 Bad Homburg Germany Phone +49 6172 9240-0 Fax +49 6172 9240-40
Wollzeile 16 1010 Vienna Austria Phone +43 1 5120099 Fax +43 1 5120183
Building Stéphanie 1 Avenue Louise 54 1050 Brussels Belgium Phone +32 2 213 30 00 Fax +32 2 213 30 01
SIMCORP NETHERLANDS (Dutch branch of SimCorp Benelux SA/NV) Gustav Mahlerplein 109-111 1082 MS Amsterdam The Netherlands Phone : +31 (0)20 708 57 64 Fax +32 2 213 30 01
SIMCORP FRANCE S.A.S. rue Saint-Augustin 29-31 75002 Paris France Phone +33 1 5535 5454 Fax +33 1 5535 5455
SIMCORP LUXEMBOURG S.A. rue Eugène Ruppert 20 2453 Luxembourg Luxembourg Phone +32 2 213 30 00 Fax +32 2 213 30 01
SIMCORP LTD. 2nd floor 100 Wood Street London EC2V 7AN United Kingdom Phone +44 20 7260 1900 Fax +44 20 7260 1911
Wolverhampton Science Park Wolverhampton WV10 9RU West Midlands United Kingdom
17 State Street – 6th floor New York, NY 10004 USA Phone +1 212 994 9400 Fax +1 212 994 8826
SIMCORP USA INC. 1999 Avenue of the Stars Suite 1100 Los Angeles, CA 90067 USA Phone +1 424 354 5151 Fax +1 424 354 5150
SIMCORP CANADA INC. 100 Wellington St. West Suite 2204 PO Box 123 ON M5K 1H1 Toronto Canada
SimCorp Asia SIMCORP ASIA PTY. LTD. Level 13, 68 Pitt Street Sydney NSW 2000 Australia Phone +61 2 9241 4222 Fax +61 2 9221 5100
SIMCORP HONG KONG LTD. Suite 2122, 21st Floor, The Center 99 Queen's Road Central Hong Kong Phone +852 2521 2680 Fax +852 2887 2711
SIMCORP SINGAPORE PTE. LTD. #58-03/05, Republic Plaza 9 Raffles Place Singapore 048619 Singapore Phone +65 6823 1517 Fax +65 6823 1376
www.simcorp.com [email protected] SimCorp's vision
SimCorp is a leading provider of software solutions and services to the global buy-side investment management industry.
1product
Based on a stable and loyal client base, strong products with a unique value proposition, and profound financial expertise SimCorp continues to create value for its stakeholders.
- A solid business model
Sharebuy back program of EUR 24.5m
96 Group quarterly data 2013 and 2014
In many ways, 2014 was a rollercoaster year that ended on a satisfactory note. Though, while we are still growing, the order inflow from new clients in North America was not satisfying. Still, our position as a full-service provider was consolidated, further establishing SimCorp as a viable front office supplier. In 2014, we added 12 new clients to our portfolio and increased business with almost two thirds of our existing clients.
These numbers are reflected in our annual results. In 2014, SimCorp achieved revenue of EUR 241.1m – an improvement of 7.1% – and posted an operating profit (EBIT) of EUR 57.3m. The results are in line with the announced, revised expectations and confirm the sustainability of our strategy. Add-on sales to existing SimCorp Dimension clients improved by 4.7% over last year, demonstrating the value of longstanding partnerships with existing clients.
Nevertheless, 2014 was a turbulent ride, where we admittedly had some difficulty predicting the end result, which led to a number of revisions to our expectations for the year. License sales to new clients have always fluctuated significantly quarter by quarter, but in this year it was even more pronounced illustrating the extra diligence new clients are showing before making major decisions. Buying an integrated solution from one vendor requires more due diligence than buying a point solution that is easier to change. Still, there is no evidence that clients are cancelling investments in new software – in fact, as outdated technology is a hindrance to growth, investment managers are compelled to invest in modern and scalable solutions such as SimCorp Dimension. SimCorp continues to invest in R&D, spending some 21% of
revenue on its solutions every year. With that in mind, we remain confident about the continued business potential.
In 2014 SimCorp welcomed a new member to our family when we acquired SimCorp Coric, a market-leading provider of reporting software. While already embedded in SimCorp Dimension, the SimCorp Coric solution is also sold as a stand-alone solution to private wealth and institutional asset management firms. Still, the EUR 10m acquisition of the UK-based company and its subsequent full integration into the SimCorp organization supports SimCorp's strategy of growing the business based on its single product platform SimCorp Dimension. Prior to the acquisition, SimCorp held a 20% stake in the company's share capital. Four out of the twelve new SimCorp orders in 2014 were based on the SimCorp Coric platform.
North America remains the world's largest capital market and, with a market share of 4%, SimCorp has its largest
growth potential here. However, we did not foresee all the challenges in North America, where our ability to execute in 2014 failed, leading to disappointing results. Nevertheless, the market potential remains intact, and with new management in place in SimCorp's North American unit, we expect sales growth in late 2015, early 2016.
SimCorp's dedicated growth markets, which besides North America include UK and France, are expected to account for more than half of our new license agreements in future as was the case in 2014, with seven of twelve new clients signed in these growth markets. In 2014, UK and France in particular showed very positive results, confirming our potential and strategy in those markets. SimCorp's mature markets – Central Europe and the Benelux – also performed strongly in 2014, thus validating the continued opportunity in these markets.
SimCorp's front office solution has now matured even further, and we are seeing new clients adopting SimCorp Dimension primarily because of our front office capabilities combined with the single engine for all position keeping – the Investment Book of Records (IBOR). We expect that gradually more of our
Klaus Holse Chief Executive Officer
existing clients will also see the advantages and adopt our front office solution.
SimCorp's extensive and ongoing investment in research and development ensures that our clients never face the challenge of operating on a legacy platform – and supports reducing risk and cost, while at the same time improving efficiency.
Obviously, SimCorp's potential can only be fulfilled by the efforts of our highly qualified employees around the world. They are key to providing the value-generating solutions that move our clients' businesses in successful directions. Once again, I want to thank our employees for pulling out all the stops and yet again doing an outstanding job. I am sure that 2015 will prove to be another demanding year – but I feel confident that SimCorp stands well-prepared to meet any challenge with modern solutions and services as well as exceptional employees with unique industry expertise.
| 2010 | 2011 | 2012 | 2013 | 2014 | |
|---|---|---|---|---|---|
| EUR/DKK rate of exchange at 31 December | 7.4544 | 7.4342 | 7.4604 | 7.4603 | 7.4436 |
| Income statement, EUR'000 | |||||
| Revenue | 185,375 | 194,815 | 209,190 | 225,129 | 241,069 |
| Earnings before interest, tax, depreciation | |||||
| and amortization (EBITDA) | 39,923 | 50,399 | 50,650 | 57,085 | 61,044 |
| Profit from operations (EBIT) | 35,199 | 46,340 | 46,915 | 54,236 | 57,263 |
| Financial items | -1,962 | 833 | 81 | -230 | 253 |
| Profit before tax | 33,237 | 47,173 | 46,996 | 54,006 | 57,516 |
| Profit for the year | 24,390 | 33,956 | 34,474 | 39,336 | 41,583 |
| Balance sheet, EUR'000 | |||||
| Share capital | 6,179 | 6,179 | 6,045 | 5,844 | 5,575 |
| Equity | 77,520 | 83,184 | 85,864 | 71,566 | 73,380 |
| Property, plant and equipment | 8,779 | 7,813 | 5,213 | 4,839 | 4,635 |
| Cash and cash equivalents | 42,689 | 48,149 | 58,897 | 47,106 | 37,995 |
| Total assets | 113,011 | 119,478 | 125,791 | 117,469 | 127,807 |
| Cash flow, EUR'000 | |||||
| Cash flow from operating activities | 28,513 | 38,396 | 46,665 | 47,447 | 44,390 |
| Cash flow from investing activities, net | -2,945 | -2,878 | -766 | -2,843 | -8,908 |
| Cash flow from financing activities | -27,528 | -30,044 | -35,362 | -55,850 | -46,524 |
| Net change in cash and cash equivalents | -1,960 | 5,474 | 10,537 | -11,246 | -11,042 |
| Employees | |||||
| Average number of employees | 1,077 | 1,048 | 1,075 | 1,093 | 1,187 |
| Financial ratios | |||||
| EBIT margin (%) | 19.0 | 23.8 | 22.4 | 24.1 | 23.8 |
| ROIC (return on invested capital) (%) | 79.0 | 108.8 | 124.0 | 158.8 | 146.3 |
| Debtor turnover rate | 6.1 | 7.1 | 7.8 | 8.6 | 7.5 |
| Equity ratio (%) | 68.3 | 69.6 | 68.3 | 60.9 | 57.4 |
| Return on equity (%) | 30.0 | 40.0 | 38.7 | 46.8 | 53.1 |
| Share performance | |||||
| Basic earnings per share - EPS (EUR) | 0.54 | 0.77 | 0.80 | 0.93 | 1.02 |
| Diluted earnings per share - EPS-D (EUR) | 0.54 | 0.76 | 0.79 | 0.92 | 1.00 |
| Cash flow per share - CFPS (EUR) | 0.63 | 0.87 | 1.08 | 1.13 | 1.08 |
| Book value per share at year end - BVPS (EUR) | 1.81 | 1.91 | 2.02 | 1.73 | 1.81 |
| Dividend per share - DPS (EUR) | 0.40 | 0.40 | 0.47 | 0.54 | 0.60 |
| Dividend per share - DPS (DKK) | 3.00 | 3.00 | 3.50 | 4.00 | 4.50 |
| Dividend payout ratio (%) | 75.9 | 54.7 | 61.2 | 59.3 | 60.3 |
| Total payout ratio (%) | 119.1 | 91.4 | 123.9 | 160.0 | 112.0 |
| Market value ratios | |||||
| Share price per share at year end - EUR | 12.01 | 11.80 | 16.94 | 28.62 | 21.83 |
| Share price per share at year end - DKK | 89.50 | 87.70 | 126.40 | 213.50 | 162.50 |
| Price/book value per share - P/BV (EUR) | 6.6 | 6.2 | 8.4 | 16.5 | 12.0 |
| Diluted Price Earnings (P/E Diluted) | 22.2 | 15.3 | 20.9 | 30.3 | 21.2 |
| Price cash flow - share price/CFPS - P/CF | 16.6 | 13.6 | 15.6 | 25.4 | 20.1 |
| Share Capital (m) | 46.0 | 46.0 | 45.0 | 43.5 | 41.5 |
| Average number of shares (m) | 45.0 | 44.1 | 43.1 | 42.1 | 40.9 |
| Average number of shares - diluted (m) | 45.4 | 44.5 | 43.6 | 42.7 | 41.5 |
| Market capitalization – EURm | 527 | 514 | 721 | 1,183 | 884 |
Financial highlights and key ratios are defined and calculated in accordance with the Danish Society of Financial Analysts' Recommendations and Financial ratios 2010. Earnings per share (EPS) and Diluted earnings per share (EPS-D) are measured according to IAS 33.
Income recognised from new licenses and add-on licenses amounted to EUR 47.7m, an increase of EUR 5.4m relative to 2013.
"When fully implemented, SimCorp Dimension will support all of our front office activities, including IBOR, compliance, risk and performance. We chose SimCorp as a business partner to help us to drive and reinforce our excellence in mastering risks, and because SimCorp Dimension is modern and scalable, and able to grow at the same pace as our business."
– Anne Courrier, Managing Director at Fédéris Gestion d'Actifs
Combining more than 40 years of experience with a clear strategy sets the direction for SimCorp – a strategy that has enabled SimCorp to record persistent organic growth over the past two decades. Going forward, reinforcing SimCorp's profile as a growth company will remain a strategic priority with focus on clearly defined targets.
SimCorp is committed to being the number one provider of investment management solutions globally and, through this, being the most attractive partner to global investment managers. Having established a successful software business targeted at the entire value chain, SimCorp has proved itself an industry leader and a preferred partner for global investment managers.
The ability to quickly adapt to market changes, which include regulatory changes, client requirements and new technologies is a critical success factor for SimCorp, and with strong foundation in the company's three business cornerstones; compelling solutions and services, loyal clients and highly skilled employees, SimCorp is determined to continue to grow.
SimCorp's business model is based on three elements: sales of software licenses, maintenance income and fees from professional services. License fees are generated from selling the right to use SimCorp's software. Maintenance income derives from sales of the right to current system upgrades
and user assistance, while sales of professional services represents service fees from the implementation, introduction and expansion of software installations.
The business model is highly transparent and builds recurring revenue. Further, the model warrants long-lasting and close client relations, which reduces SimCorp's operational risk.
The flexibility of SimCorp's solutions allows clients to choose from a vast variety of different modules combining core functions in front, middle and back office in one integrated platform. These modules are implemented by SimCorp consultants in close cooperation with the client. More and more clients choose to expand the services rendered from SimCorp to include business process services (packaged solutions) and additional operational services (serviced solutions).
A typical sale of SimCorp's flagship product SimCorp Dimension to a new client includes a purchase of licenses, typically in the range between EUR 1.5m and EUR 3m depending on the functional requirements, number of different asset classes and number of users.
During the first 10 years of a client relationship – which overall typically lasts more than 20 years – the total accumulated revenue for SimCorp is typically four to eight times the initial license revenue. This includes the initial installation, professional services for implementation, additional functionality/ modules and users, and ongoing maintenance.
Maintenance is calculated annually and represents roughly 18–22% of the value of the installed license base. SimCorp's installed license base, which is the accumulated total investments made by SimCorp's clients, was at the beginning of 2015 EUR 608m on SimCorp Dimension platform. Approximately 90% of annual revenue is derived from existing clients.
SimCorp Coric, SimCorp's client communication solution, is sold on a subscription basis, typically on a three or four-year term.
Continual investment in its software solutions, focus on growth markets and maintaining a solid cashflow that can be returned to shareholders as dividend and used for treasury share buyback are the fundamental basics of SimCorp's
strategy. In order for SimCorp to reach its ambitious business objectives delivering double-digit growth, the company has determined five areas of strategic priority for the next three years. The areas reflect how SimCorp sees and understands the key trends in the market that influence SimCorp's continued growth. The five areas are:
SimCorp continually aims to add new clients in all markets. However, because of the business potential in especially North America, the UK, and France, SimCorp focuses on these markets, and in 2015 and beyond, SimCorp will continue to build its position in these markets. North America particularly has significant growth opportunity, and following the installement of a new management team in 2014, Sim-Corp feels well prepared to exploit the market's potential.
In today's market with increased focus on compliance and risk management, the investment book of records, the so-called IBOR, has become a competitive tool for global investment managers. The IBOR allows investment managers to maintain an overview of all their positions – an important feature when trying to understand one's positions across all asset classes to not only meet compliance demands, and performance requirements but also to manage risk. The front office also relies on this data, as the IBOR keeps history that can be used for investment decisions.
Combining these two – the IBOR and the front office, where SimCorp has made sustained investment to now offer a solution that is comparable to best-of-breed offerings in the market – SimCorp believes it is ahead of other front office suppliers that are not able to provide the IBOR, hence providing SimCorp with a competitive advantage that the company intends to exploit.
The investment industry today is increasingly demanding more business related services with the aim of reducing
"The greatest business advantage for BMO is that the IBOR provides the most up-to-date position data to drive better portfolio and trading decisions. At all times, the IBOR contains full, accurate information on which our portfolio managers can make investment decisions and traders can trade. The risk of wrong decision-making based on incorrect data is simply too high to continue being ignored."
– Todd Healy, Head of investment operations at BMO Global Asset Management
SimCorp continuously focuses on adding new clients in all markets, but with a particular focus on the growth markets: North America, the UK and France.
500
4%
overall cost and making business more scalable. Further, the investment managers tend to outsource their business applications and the related tasks – either partly or in full – in order to focus on their core business, which typically does not include system operations. SimCorp will work actively towards becoming an Application Service Provider, delivering SimCorp Dimension as a fully managed service including hosting of the solution, application operation as well as application management.
As the traditional asset classes are under increasing pressure from investment strategies and declining interest rates, many asset managers, especially pension funds, are progressively looking towards investment in alternatives that typically have a longer horizon. As a consequence SimCorp will put additional efforts into extending SimCorp's solution to also cater for investments in non-liquid assets that include, for example infrastructure, private equity, hedge funds and more.
As a specialized financial software and services provider, SimCorp is dependent on highly skilled and knowledgeable employees. The war for new talent is intensifying, and so is the need to become even better at attracting and retaining that talent. As the employees constitute the company, the company needs to bring and hold the right people on board in order to secure the success of the business. SimCorp therefore puts additional focus on attracting and maintaining the right staff. Efforts include renewed focus on management competences, management training, determining key positions and implementing a talent management tool.
The market in which SimCorp operates, the buy-side investment management industry, is greatly impacted by the global macroeconomic conditions. In recent years, the industry has undergone significant rationalization resulting in only modest growth in the number of new SimCorp clients.
Nevertheless, the global investment managers' ultimate goal is still to provide higher return while at the same time adhering to new regulation, the introduction of new asset classes and increased focus on risk and performance. A significant number of investment managers continue however to oper-
ate on old and outdated system platforms, the so-called legacy systems, that are generally ill-equipped to deal with the current and expected pace of change.
SimCorp remains among the few independent software companies that continues to invest substantial resources in R&D; in fact R&D accounts for approximately 30% of SimCorp's total expenses. In return, SimCorp's clients benefit from two annual system upgrades, which means SimCorp provides a perennial guarantee that clients will never operate on an outdated platform.
SimCorp's market – defined as global buy-side investment management companies with assets under management of more than EUR 10-15bn – comprises approximately 1,200 asset and fund managers, insurance companies, pension funds, mutual funds, sovereign wealth funds, banks, and mortgage lenders. Of the identified potential clients in the market, SimCorp estimates that roughly 10% run on internally developed systems. The remaining 90% run on older legacy systems, various 'best-of-breed' solutions, other modern systems, or via third-party administrators. Every new client that SimCorp has won in the past five years has replaced either a legacy system or an internally developed
IT systems platform. It has also been the case that a client has decided to insource otherwise outsourced operations and run its business on SimCorp Dimension. Finally, SimCorp has also won clients in the asset services segment – the socalled "third party administrators". Hence SimCorp views the full 1,200 institutions with more than EUR 10-15bn in assets under management as the targetable market.
| Market units | Number of clients | Total market | Market share |
|---|---|---|---|
| North America | 20 | 500 | 4 % |
| Central Europe | 50 | 200 | 25 % |
| Western Europe | 22 | 170 | 13 % |
| UK | 20 | 150 | 13 % |
| Asia | 12 | 110 | 11 % |
| Nordic | 47 | 70 | 67 % |
| Total | 171 | 1,200 | 14 % |
* Figures are based on SimCorp estimates.
SimCorp's clients comprise some of the financially strongest investment managers in the industry. A trusting and loyal cooperation is paramount to SimCorp, and clients need to feel confident about SimCorp's ability to stay at the forefront of developments in the global financial markets and to continue to meet clients' present and future business requirements. Today, SimCorp has 171 SimCorp Dimension clients all over the world covering a total market share of roughly 14%. However, for the market segment constituting the 200 largest asset holders in the world, SimCorp has a leading market share of over 20%.
SimCorp is a leading provider of investment management solutions and services for the financial sector. SimCorp's solutions support investment managers handling all tasks related to asset management across the enterprise. In addition to its software solutions, SimCorp provides a variety of professional services that are designed to support clients in all aspects of the their software acquisition cycle; from initial implementation, planning, and configuration to maintenance, operations, IT and end-user training programs, and further to optimization of business processes.
The core of SimCorp's solutions is SimCorp Dimension, a multidimensional solution that is completely modular and seamlessly integrated. The individual business solutions can be combined to support the entire investment management process from front to back throughout the enterprise – or any part thereof. The software is released in a new and upgraded version every six months.
In addition to SimCorp Dimension, SimCorp also markets SimCorp Coric as a stand-alone solution. SimCorp Coric is a client communication solution, which is embedded in Sim-Corp Dimension's Report Book Manager. The SimCorp Coric
In 2014 SimCorp gained global recognition for its solutions winning the following industry awards
Client Communications is easily integrated with any investment management platform and enables portfolio managers to present increasingly complex portfolio data – extracted from any source – to their clients.
SimCorp's employees are highly educated and with long and extensive expertise, mostly within finance and software development. More than 90% of the SimCorp staff hold an academic degree, primarily in finance, IT, software engineering, and economics, and as a provider of highly specialized software, SimCorp is dependent on skilled and knowledgeable employees.
Human Resource Management is a key priority in SimCorp – not least because SimCorp has reached a size, organizational maturity, geographical complexity, and level of cross-border employee mobility at which global alignment of key people processes has become critically important. Because of SimCorp's international expansion, sourcing of talent is increasingly important, particularly in SimCorp's growth markets. The demand is being met through local recruitment as well as extensive cross-border mobility of existing and new employees.
SimCorp measures and analyses employees' satisfaction on an ongoing basis based on a large employee survey conducted every other year, complemented by a number of smaller snapshot surveys every six months. Although SimCorp's general employee satisfaction is high, it remains an area of attention, as employee satisfaction and engagement are key parameters on for instance absence and staff turnover.
Comprehensive knowledge of financial theory and software development combined with thorough experience and insight into clients' business processes are crucial for Sim-Corp's business activities, and the group therefore provides an extensive training program to all employees in SimCorp. The cornerstone is the SimCorp Academy program, a three-week, full-time course that builds competences in and around the use and implementation of SimCorp's solutions. The course is mandatory for all new employees that work directly with SimCorp Dimension. 101 employees went through the course in 2014 compared to 87 in 2013.
Finally, SimCorp believes that a dedicated effort towards better leadership will help attract and retain highly qualified employees and enhance the overall condition and success of the company. Therefore, the company also operates a comprehensive leadership training program, the SimCorp Leadership Academy, to ensure that SimCorp always has management resources that are among the best in the industry with the ability to develop, challenge and strengthen both employee competences and corporate culture. As with all other training in SimCorp, the elements of the SimCorp Leadership Academy are closely linked to the practical development of experience in the organization in order to fully optimize the benefit derived from training.
In May 2014, SimCorp Coric wins the Top Wealth Management Award for the second running year.
On 1 March 2014, SimCorp acquired the award-winning reporting software developer SimCorp Coric. The acquisition advances SimCorp's product strategy of continually building on SimCorp Dimension's integrated portfolio of technical and business applications, while also providing selected applications as standalone solutions to leading investment managers.
SimCorp Coric's mainstay product is the award-winning Client Communications Suite that empowers investment management firms to improve client service and enrich client experience through effective and informative reporting. At the same time, it reduces operational risk and cost. Business users can create and modify client reports with ease, speed, and accuracy.
SimCorp Coric Client Communications is embedded in the Report Book Manager, the client reporting management solution that is fully integrated with SimCorp Dimension, Sim-Corp's investment management solution, allowing SimCorp Dimension users to easily create and modify client reports, and present increasingly complex portfolio data quickly and cost-effectively.
While fully integrated with SimCorp Dimension as part of the Report Book Manager, SimCorp Coric is also marketed as a stand-alone solution, which integrates seamlessly with any investment management platform, enabling users to extract data from any source.
In 2014, SimCorp Coric signed four new license agreements; three in North America and one in the UK. SimCorp expects to benefit from the acquisition of SimCorp Coric both in terms of cutting-edge technology and functionality as it represents an opportunity to grow SimCorp's market share in the reporting domain. Further, the acquisition represents
an opportunity to eventually cross-sell between SimCorp Dimension and SimCorp Coric.
SimCorp Coric was acquired by SimCorp with effect from 1 March 2014. For the past 10 years SimCorp has held 20% of the shares in the company.
SimCorp Coric added four new clients in 2014 of which three were in North America. The SimCorp Coric solution is sold as a subscription license typically covering three to four years. The total contract value of license deals that SimCorp Coric was servicing was EUR 7.4m at the end of 2014.
| EURm | 2014 (March - December) |
|---|---|
| Total revenue | 5.4 |
| – License fees | 2.4 |
| – Professional services | 1.5 |
| – Maintenance income | 1.4 |
| – Training activities, etc. | 0.1 |
| New wins | 4 |
| Market share | 2% |
| SimCorp Clients | 30 |
| Number of employees | 43 |
SimCorp expects revenue growth of between 5% and 10% in 2015 (local currencies), with an EBIT margin of between 23% and 26% (local currencies). SimCorp's long-term target is to generate double-digit annual revenue growth, and expand margins year-on-year.
| Financial targets 2015 | Estimated revenue distribution 2014 | ||
|---|---|---|---|
| Annual report 2014 | Realized | ||
| 16 February 2015 | 2014 | Coric. | |
| Revenue (local currencies) | 5%-10% | 7.6% | Distribution of revenue |
| EBIT margin (local currencies) | 23%-26% | 24.1% | ment industry are expected to be: |
Based on the exchange rate prevaling per end of January 2015, SimCorp estimates reported revenue to be positively impacted from currency fluctuations by around 3%. The impact from currency fluctuations on reported EBIT margin is expected to be positively impacted of around 1%.
The underlying positive macroeconomic trends seen during 2014 are expected to continue in 2015.
The total number of deals available in 2015 is difficult to predict, but based on the strong market performance that SimCorp has delivered during the last three years – realizing win ratios comfortably above 40% each year – SimCorp expects to continue to gain market share in 2015.
SimCorp believes that investment managers' IT budgets for 2015 will increase slightly compared to the level seen in 2014, due to an increased focus on legacy system replacement. Further SimCorp expects to be able to gain an even stronger position with current as well as new clients in the front office as a result of the continued investment into the front office
of SimCorp Dimension in recent years. SimCorp also expects to benefit further from the full ownership of SimCorp Coric by cross selling between SimCorp Dimension and SimCorp Coric. Annual report 2014 Realized
The most important focus areas in the investment management industry are expected to be: – License fees 20–30% 19.8% – Professional services 30–35% 33.1% – Maintenance 45% 45.8%
Based on the current business environment and taking the current position of SimCorp into consideration, the expectations for 2015 are to grow revenue in local currencies by between 5% and 10% and to generate an EBIT margin measured in local currencies of between 23% and 26%.
The changes in the SimCorp Dimension management team in North America are expected to have a positive impact on performance in 2015. However, it is not expected that new SimCorp Dimension license deals will materialize in the first half of 2015 in North America, rather in late 2015, early 2016.
| EUR per 100 Currency |
2014 YTD average rates |
31 January 2015 current rate |
|---|---|---|
| USD | 75.85 | 88.46 |
| CAD | 67.92 | 69.82 |
| AUD | 68.08 | 68.80 |
| SGD | 59.54 | 65.39 |
| GBP | 124.51 | 133.14 |
| CHF | 82.44 | 95.53 |
| NOK | 11.91 | 11.32 |
If foreign exchange rates prevailing on 31 January 2015 persisted for 2015, they would have a positive impact on reported revenue of up to 3 %-points and on reported EBIT of positively 1 %-point compared with 2014.
For 2015, SimCorp expects revenue to be distributed as follows: license fees between 20–30%; fees from professional services between 30–35%; and maintenance income around 45%. Compared to previous years, the estimated distribution of revenue has not changed.
The breakdown of the license fee income is expected to be one third for license fee revenue from new licenses and two
Financial targets 2015 Estimated revenue distribution 2014
| Annual report 2014 16 February 2015 |
Realized 2014 |
|
|---|---|---|
| Distribution of revenue | ||
| – License fees | 20–30% | 19.8% |
| – Professional services | 30–35% | 33.1% |
| – Maintenance | 45% | 45.8% |
| – Training activity, etc. | 1–2% | 1.3% |
| Costs (% of total expenses) | ||
| – Staff | 75% | 74.0% |
| – Research and development | 30% | 27.6% |
thirds from sales of additional licenses to existing clients. The license fee revenue from additional license agreements is expected to grow in EUR from the 2014 level. Although the relative revenue impact of single individual orders is decreasing, growth in the Group's revenue will continue to be impacted by relatively few but large SimCorp Dimension orders expected to be won at relatively irregular intervals.
Accordingly, income will vary considerably from one reporting period to the next. Clients who already had business relations with SimCorp on 1 January 2015 are expected to account for around 90% of total revenue in 2015 – unchanged from 2014.
Staff costs are expected to account for around 75% of SimCorp's expenses in 2015. R&D is expected to account for around 30% of total expenses. Administrative expenses are expected to be stable.
SimCorp's long-term target is to generate double-digit annual revenue growth, and expand margins year-on-year. SimCorp's long-term expectations are based on the assumption that the level of new deals in the market per year will be between 40 and 50.
It is essential for SimCorp's Board of Directors and management that risk exposure is thoroughly monitored and controlled. As the business environment is ever developing and highly volatile, SimCorp's policies and procedures ensure an efficient management of identified risk.
SimCorp's business entails a number of commercial and financial risk elements that potentially have a negative effect on the company's future activities and results. To manage risk to the fullest possible extent, factors which are subject to uncertainty, and hence categorized as potential risk, are systematically monitored, analysed, and managed.
The following section outlines a brief description of the most important risks together with a brief description of the preventive measures implemented to manage and control each risk. A comprehensive description of SimCorp's financial risk is provided in note 29 to the financial statements.
Overall, SimCorp's management believes the company is well prepared to manage the potential risk challenges. On a quarterly basis, the company's main risks are reported to the Board of Directors, including an assessment of the probability of occurrence of each risk and of the likely impact on the company's financial performance, together with mitigation options.
In SimCorp's Corporate Governance Guidelines, the organizational setup of Risk Management is described, see www.simcorp.com/corpgov2014uk
Propose mitigating measures
Make decisions related to risk-reducing measures
"Recently, SimCorp has experienced a growing interest from sovereign wealth funds that see a good fit between their requirements and SimCorp Dimension's functional coverage. Supporting funds that manage not only private funds but also state-owned funds that are usually of major economic and fiscal importance to society is a major responsibility that SimCorp takes very seriously."
– Klaus Holse, CEO SimCorp
Anticipating and responding to important trends in the market for professional investment managers are critical to SimCorp's ability to win market share. Failing to spot these trends naturally represents a risk to SimCorp.
Also, competitors' expansion of international service-offerings and distribution could endanger SimCorp's leading market position. In addition, new local requirements or legislation may influence the current demand for SimCorp's product.
Through extensive market research and industry analyses, SimCorp keeps abreast of trends in the global financial markets.
Also, the company's close and longstanding relationships with clients allow SimCorp to anticipate and respond to market movements and new requirements.
SimCorp's business is based on specialized expertise and innovation. It is imperative that SimCorp continues to attract, develop and retain the most skilled employees and management talent. Failure to do so constitutes a risk to the Group.
Moreover, it is considered a genuine risk to SimCorp's long term position if the company's corporate values do not continue to serve as a core basis for business execution and development.
Product innovation, improved technical infrastructure, and enhanced technical capabilities are fundamental elements in meeting new system requirements in the market. Being unable to secure those elements would risk SimCorp Dimension eventually ending up as a legacy offering.
SimCorp's ability to offer clients the best software products with the highest possible configurability and flexibility is paramount. Inadequate quality control and testing prior to the release of new software versions increase the risk of reduced client satisfaction and loyalty.
It is key for SimCorp to provide standardized end-to-end serviced solutions, both during implementation and after clients have gone live. Running on SimCorp Dimension entails having to deal with a variety of technical aspects such as technical infrastructure, WAN lines, third-party integration, databases, data interfaces and software applications.
Related services are provided by SimCorp and subcontractors engaged by SimCorp. If SimCorp fails to balance the requirements of clients and agreements with these subcontractors, SimCorp risks impairing the clients' businesses as well as its own.
During implementation the largest risk is an inadequate implementation of SimCorp Dimension, leading to increased operational risk and costs for SimCorp's clients.
Following implementation, the most apparent risk is possible breach of service level agreements and other committed standards.
SimCorp allocates substantial resources to internal and external training and development to ensure that professional and personal skills are constantly being maintained and enhanced throughout the organization.
To ensure that SimCorp employees possess the relevant competences, training activities to a large extent draw on the experiences of more senior employees, which optimizes the benefits of all employee development initiatives.
SimCorp offers updated product versions of SimCorp Dimension every six months. Updates include enhanced system functionality and improved technical infrastructure based on a systematic prioritization of client and market requirements.
A key element of the product development strategy is extensive quality control and testing prior to the release of new software versions. SimCorp continually raises and follows up on internal quality targets, ensuring alignment with expected market developments.
SimCorp has established various measures to control both external and internal risk to the provision of full-service packages. Externally, a due diligence process is conducted on each subcontractor to ensure it has sufficient strength – financially, organizationally, and product-wise – to meet SimCorp's requirements. Internally, a clear description and overview of each delivery component allows for a clear segregation of duties.
Moreover, SimCorp's consultants undergo continual training to maintain and develop the required knowledge and experience in relation to the operational services.
Larger complex multi-year implementation contracts are reviewed and scored based on a central model.
The score is a reflection of the perceived risk in the implementation project. All projects have to score a certain sum.
Protecting SimCorp's long term business interests is vital to its continued operations. This includes legal risk that may impact SimCorp's business. SimCorp believes contractual risk as well as legal risk related to regulatory requirements are critical. Failure to meet or implement regulatory requirements in a timely fashion with respect to, for instance data protection, confidentiality agreements, IPR, and fraud constitutes a risk.
SimCorp is subject to tax and fiscal policies in the countries where the company operates. Changes to such local policies may affect SimCorp's tax and fiscal position.
Due to the nature of SimCorp's operations, the company is exposed to changes in currency exchange rates. A detailed analysis and description of financial risk exposure is provided in note 29 to the financial statements.
SimCorp ensures that all contracts entered into are carefully worded. Sim-Corp monitors and assesses the scope of any new legislation potentially affecting business procedures.
SimCorp's Group Finance department manages the company's currency and financial exposure pursuant to the treasury policy approved by the Board of Directors, just as it keeps the overall currency exposure within defined limits.
Furthermore, Group Finance is diligent in pursuit of securing that, in line with the tax policy, SimCorp is at all times tax compliant in the countries where SimCorp conducts business.
SimCorp has implemented a number of business procedures and controls to enhance transparency of individual activities and provide an improved overview of financial exposure.
Generally, financial reporting involves the risk of non-compliance with applicable legislation and potential business risk.
There is also a risk of inadequate internal controls designed to avoid significant errors and omissions in financial reporting.
SimCorp has implemented various business procedures and controls to ensure compliance in relation to financial reporting. These are based on a range of general principles, policies and procedures, which are reviewed by SimCorp's Board of Directors and Executive Management Board on a regular basis. The Danish Financial statements Act requires that an overall description of the Group's internal controls and management of risk with regard to financial reporting is included in the financial statements. The full wording of SimCorp management's statutory responsibilities under section 107 b of the Danish Financial statements Act is available on SimCorp's website: www.simcorp.com/corpgov2014uk
The Executive Management Board monitors compliance and provides the Board of Directors with relevant legislation and reports.
As a technology company with a core business based on modern information technology, SimCorp's failure to adequately protect itself against IT risk, represents a particular risk. Cyber crime including unauthorized access to SimCorp's network and data could endanger applications as well as the infrastructure and the technical environment stored on SimCorp's network. The same goes for virus attacks and theft of code and know-how which could also entail prolonged system breakdowns impairing productivity and potentially rendering SimCorp unable to service its clients.
SimCorp continuously monitors its global technical infrastructure, aiming to identify and minimize risk to the company's production and operation. Through well-established procedures and solutions, SimCorp is able to quickly restore critical business services.
SimCorp also operates with a high data security level and maintains strict access control to the physical environment as well as to its data network. The controls are monitored and reviewed on a regular basis in order to optimize information security.
Further SimCorp has developed and implemented a disaster recovery plan to restore all critical business services.
SimCorp achieved an EBIT margin of 23.8% in 2014 and EBIT increased by 5.6% compared to 2013. Strong performance in license revenue from new licenses and the performance from the SimCorp Coric product contributed to the positive revenue growth of 7.6% measured in local currencies despite negative growth in the North American market of 8.3%. On balance, and taking the negative growth in the North American market into consideration, SimCorp views the performance in 2014 as satisfactory.
| Financial expectations and results 2014 | ||||||
|---|---|---|---|---|---|---|
| Annual report 2013 25 February 2014 |
H1 2014 29 August 2014 |
9M 2014 26 November 2014 |
Trading update 18 December 2014 |
Trading update 5 January 2015 |
||
| Original guidance | Revised guidance | Revised guidance | Revised guidance | Revised guidance | Realized | |
| Revenue (local currencies) Revenue (reported currency) |
10% 8.5% |
8%-10% 7%-9% |
Around 7% Around 7% |
Around 4% Around 4% |
Above 6% Above 6% |
7.6% 7.1% |
| EBIT margin (local currencies) EBIT margin (reported currency) |
24% 23.8% |
Around 24.5% Around 24.3% |
Around 24% Around 24% |
Around 23% Around 23% |
Above 23% Above 23% |
24.1% 23.8% |
SimCorp's expectations at the beginning of 2014 were a revenue growth measured in local currencies of 10% including the impact from the SimCorp Coric acquisition effective from 1 March 2014 of 2%-points. In reported currency SimCorp expected revenues to grow 8.5% including a 2%-point impact from the SimCorp Coric acquisition. EBIT margin in local currencies was expected to be 24% and in reported currency (EUR) the expectation for the EBIT margin was 23.8%. The impact on EBIT margin from the SimCorp Coric acquisition was expected to be negative by half a percentage point in both local currencies and reported currency.
In the half-year report, the expectations for 2014 were revised to a revenue growth in local currencies of between 8% and 10% corresponding to a growth in revenue in reported currency of between 7% and 9%. Expectations for the EBIT
margin in local currencies was lifted half a percentage point to around 24.5%, as was the expectation for the reported EBIT margin to around 24.3%. At the same time, SimCorp commented that the developments in North America were unsatisfactory and that the recovery of the market unit would be gradual during 2015 increasing uncertainty about the expected revenue growth.
The Q3 report continued to be negatively impacted by the lack of new license deals from North America and there was increasing uncertainty about the completion of certain sales in 2014. Consequently, SimCorp revised its expectations for revenue growth downwards to around 7% in both local currencies and reported currency. As a result of strong cost management the EBIT margins were only marginally reduced to be around 24% in both local and reported currencies.
Despite the further downward revision of revenue growth expectations, the expectations for revenue from both new and additional licenses in Q4 were expected to exceed 2013.
On 18 December, SimCorp made another change to its expectation for revenue growth, as it appeared unlikely that all anticipated sales would complete before year-end. Feedback from clients indicated that – for various reasons – a number of significant additional license deals as well as a number of new license deals would not be signed prior to year-end. SimCorp downgraded revenue expectations to around 4% in both reported and local currencies with a corresponding EBIT margin of around 23% in local and reported currencies. The EBIT margin was maintained at around 23% as the effect of a fall in revenue would be offset by lower corporate bonus and sales commissions.
However, sales of additional licenses to existing clients were ultimately significantly higher than anticipated on 18 December 2014, and one of two new license deals signed in the last two weeks of December was not anticipated. This led SimCorp on 5 January 2015 to upgrade its expectations for the full year revenue growth to be above 6% in both local and reported currencies with an EBIT margin above 23% in local and reported currency.
The strong close resulted in revenue growth for the year of 7.6% in local currencies of which 2.3%-points can be attributed to the SimCorp Coric acquisition. In reported currency, revenue grew 7.1% of which 2.4%-points can be attributed to the SimCorp Coric acquisition. EBIT margin was 24.1% in local currencies including the negative impact from the
Conversion rate: Add-on licenses as a percentage of the installed license base beginning of year. License base: Accumulated license order value.
SimCorp Coric acquisition of one percentage point against expectations of half a negative percentage point. In reported currency EBIT margin was 23.8% including a negative impact from the SimCorp Coric acquisition of one percentage point. The deviation from the expected EBIT margin impact from the SimCorp Coric acquisition is attributed to an adjustment to acquisition accounting.
In 2014, SimCorp continued to focus on growing the company while at the same time maintaining sustainable profitability, ensuring that SimCorp will be able to deliver superior software and services in the long term. The focus areas for 2014 can be summed up with the following headlines:
In 2014 SimCorp signed 8 new clients on the SimCorp Dimension platform. Six of the eight new orders were driven either by SimCorp's front office solution alone or in combination with an IBOR solution, or the front office solution was part of the total new order. In addition, the number of existing clients using the front office solution increased by 20, and several existing clients decided to change their current "best-ofbreed" front office solution to SimCorp Dimension.
While growth from new clients in SimCorp North America was clearly a disappointment in 2014, SimCorp did see increased usage of the SimCorp Dimension platform by existing clients. SimCorp noted a considerable demand for continued support and services, which led to continued high activity levels in the professional services business in North America. Because of the lack of progress in signing new clients, the North American management team, including the managing director and the sales director, was replaced during 2014.
New sales also disappointed in the UK – the second of SimCorp's three designated growth markets, where only one new SimCorp Dimension client was signed. However, the sale of additional software and services to existing clients was at a satisfactory level. On balance though, the performance in the UK was disappointing. A new managing director was appointed in the UK on 1 April 2014. SimCorp has confidence in the new leadership and expects growth to pick up in 2015.
Activity in SimCorp's French market unit was high resulting in two new clients and significantly more services being sold during 2014 than in 2013. Also, existing clients in France bought additional user licenses and functionality bringing the total revenue growth in the French market to more than 60% compared to 2013.
Throughout the year, SimCorp has remained focused on usage of resources to preserve a satisfactory earnings margin despite lower-than-expected sales. SimCorp finds it important to ensure that an appropriate balance is maintained between topline growth and resource spend. SimCorp still believes that it will reach its target of double-digit growth rates within the foreseeable future.
The total license order inflow increased by 2.5% to EUR 43.9m in 2014 including SimCorp Coric orders. The order inflow for SimCorp Dimension decreased by 6.9% to EUR 39.9m. Eight new SimCorp Dimension solutions were sold, totaling EUR 9.1m and four new SimCorp Coric solutions were sold totaling EUR 3.5m. The total order book increased from EUR 13.8m at 1 January 2014 to EUR 16.7m at 31 December 2014 including the order book value of SimCorp Coric con-
tracts of EUR 7.4m. The order book value of SimCorp Dimension orders thus decreased from EUR 13.8m to EUR 9.3m as a result of various implementation projects being completed in 2014.
While SimCorp did not sign any new SimCorp Dimension clients in North America in 2014, three of the top 100 global asset managers acquired the SimCorp Coric platform. A new North American management team has been put in place and the pipeline for 2015 and onwards is beginning to emerge. The lack of performance is a sales execution issue rather than a function of market conditions or lack of functionality in the SimCorp Dimension platform. The SimCorp Coric unit in North America will continue to execute sales in the market as a separate unit, sharing market intelligence and client leads with the SimCorp Dimension unit.
SimCorp signed three new SimCorp Dimension license orders in the other designated growth markets – one in the UK market unit and two in the French market unit, of which one was in Switzerland but driven by the French office. Another SimCorp Coric order was also signed in the UK. In addition, SimCorp made three new license sales for SimCorp Dimension in the mature central European market, as well as two in the Benelux market unit bringing the total number of new SimCorp Dimension license orders to eight and the total of new SimCorp Coric license orders to four.
Order inflow of additional licenses for SimCorp Dimension was the highest since 2010 at EUR 31.4m – an increase over 2013 of 6%. Measured as a percentage of the total value of the installed SimCorp Dimension license base the conversion rate for additional licenses was 5.6% in 2014 compared to 5.5% in 2013. In 2014, SimCorp saw an increase in existing clients adopting the new Front Office suite. This was both the
case for clients using the old SimCorp Dimension Front Office suite and clients who had previously used a non-SimCorp solution for front office operations.
On the SimCorp Coric platform, SimCorp also saw existing clients expanding their usage of the platform, both in terms of functionality and in number of users.
SimCorp derives revenue from three sources: license fees, fees from professional services, and maintenance income. SimCorp generated total revenue of EUR 241.1m in 2014 compared to EUR 225.1m last year, an increase of 7.1% compared to 2013. SimCorp Coric contributed EUR 5.4m of the revenue growth in 2014. Exchange rate fluctuations for the year had a negative impact of EUR 1.2m on revenue, equal to 0.5%. In local currencies revenue thus increased by 7.6%.
SimCorp's total license fee revenue in 2014 was EUR 47.7m, which was EUR 5.4m higher than last year. Of the increase EUR 2.4m can be attributed to the inclusion of SimCorp Coric. License fee revenue from new licenses on the SimCorp Dimension platform increased by EUR1.6m. Also, orders released from the order book and income recognized in 2014 impacted license revenue positively by EUR 5m in 2014. In total, license fee revenue accounted for 19.8% of the Group's total revenue compared to 18.8% last year. Revenue recognized from the sale of initial licenses, including the impact of SimCorp Coric of EUR 2m accounted for EUR 15.8m compared to EUR 12.2m in 2013. Revenue recognized from add-on licenses to clients, including the impact of SimCorp Coric of EUR 0.4m, was EUR 31.9m compared to EUR 30.1m last year. Financial expectations and realized 2013 Estimated distribution of revenue and realized 2014 Revenue > 5% > 8% 9.5%–10% 10.0% (local currencies) EBIT margin > 22% > 23% 23.5%–24% 24.1% (reported currency) Annual report 2012 27 February 2013 H1 2013 24 August 2013 Trading update 6 January 2014 Realized
As in 2013, more than 100 clients have expanded their use of SimCorp Dimension during 2014. This includes the 15 largest clients who on average generated add-on license revenue of EUR 1.3m each compared to last year's level of EUR 1m. SimCorp's existing clients made additional investments in SimCorp Dimension in 2014, and the number of clients with a license base of more than EUR 2m has increased by 4%-points to 64% of all clients at 31 December 2014. The accumulated value of the installed license base for clients that have an installed license base above EUR 2m accounted for 88% of the value of the total installed license base, 3%-points higher than the level last year. The license base is the contract value of all software licenses sold.
The ten largest clients generated around 22% of SimCorp's total revenue, which is an increase from last year's level of 19%. Again, no single client accounted for more than 4% of the revenue.
| Annual report 2013 25 February 2014 |
Realized 2014 |
|
|---|---|---|
| Distribution of revenue | ||
| – License fees | 20–30% | 19.8% |
| – Professional services | 30–35% | 33.1% |
| – Maintenance | 45% | 45.8% |
| – Training activity, etc. | 1–2% | 1.3% |
| Costs (% of total expenses) | ||
| – Staff | 75% | 74.0% |
| – Research and development | 30% | 27.6% |
| Sales and distribution Administration |
16% 8% |
17% 2014 2013 9% |
|---|---|---|
| Cost of sales | 48% | 47% |
| Research and development 28% | 29% | |
| Sales and distribution | 15% | 16% |
| Administration | 9% | 8% |
| Cost of sales Research and development costs EURm Sales and |
80.9 49.5 Costs 2014 27.0 |
Share of 47% consoli 29% dated costs 2014 16% |
36% Share of 22% revenue 2014 12% |
6% Change 9% relative to 2013 (1)% |
|---|---|---|---|---|
| Sales and distribution cost distributions costs |
27.5 | 15% | 11% | 2% |
| Cost of sales Administrative expenses |
89.3 13.5 |
48% 8% |
37% 6% |
10% 4% |
| Research and development costs | 50.8 | 28% | 21% | 3% |
| Total Administrative expenses |
170.9 16.4 |
100% 9% |
76% 7% |
5% 21% |
| Total | 184.0 | 100% | 76% | 8% |
Fees from professional services were EUR 79.8m including the impact of SimCorp Coric of EUR 1.5m compared to EUR 76.3m in 2013, equal to a 4.5% increase. Fees from professional services accounted for 33.1% of total revenue in 2014 compared to 33.9% in 2013.
Maintenance income increased with the completion and implementation of new client installations and new functionality to existing clients. It increased by 5.9% from last year's EUR 104.3m to EUR 110.4m. Of the increase, EUR 1.4m can be attributed to SimCorp Coric. Maintenance income accounted for 45.8% of total revenue compared to 46.3% in 2013. License agreements won in 2014 will increase annual maintenance income by around EUR 8.5m once implemented.
SimCorp entered 2015 with signed revenue for the full year of EUR 168.8m – an increase of EUR 11.8m compared to the beginning of 2014, and higher than ever before.
SimCorp saw strong top-line growth in one of the designated growth markets in 2014, France, while some of the more mature markets also enjoyed relatively high growth, taking Sim-Corp's position in these mature markets into consideration.
| EURm | 2014 | 2013 | Change % |
|---|---|---|---|
| Central Europe | 70.6 | 68.5 | 3.1 |
| Nordic | 56.1 | 53.9 | 4.6 |
| North America | 35.5 | 38.0 | -6.6 |
| Western Europe | 36.9 | 27.5 | 34.2 |
| UK | 19.7 | 21.3 | -7.5 |
| Asia | 16.9 | 15.9 | 6.3 |
| Coric | 5.4 | - | |
| Total | 241.1 | 225.1 | 7.1 |
SimCorp's total operating expenses (including amortization and depreciation) increased by 7.7% to EUR 184.0m in 2014 compared to EUR 170.9m in 2013. Of this increase, SimCorp Coric accounted for EUR 6.7m or 3.9%-points. The total costs were marginally reduced by currency fluctuations of EUR 0.8m.
In 2014, 74.0% of SimCorp's total costs were directly related to employees compared to 73.4% in 2013. The cost increase in 2014 was driven by an 8.6% increase in the average number of full-time employees from 1,093 to 1,187, of which 35 FTE´s can be attributed to SimCorp Coric, and a general salary increase of 2.5%. The number of employees was 1,224 at the end of 2014, representing an increase of 61 compared to 2013 of which 43 can be attributed to SimCorp Coric.
Salary costs for implementation consultants are included in costs of sales and account for a significant part of the total cost of sales. As a result of the increased activity level in 2013, which continued throughout 2014, total cost of sales increased by 10.4% to EUR 89.3m.
R&D costs increased by 2.4% from EUR 49.5m to EUR 50.8m. The increase was mainly driven by the general salary increase of 2.5%. Management maintains focus on the ongoing improvement of efficiency and effectiveness within the R&D division.
The Group's sales and marketing capacity was at the level of last year reflecting an unchanged level of activity. Focus on increasing awareness particularly in North America has been maintained throughout the year. For the more established markets, focus in 2014 has been on ongoing marketing efforts to safeguard SimCorp's market leading position.
SimCorp's total sales and distribution costs increased by 1.8% from EUR 27.0m to EUR 27.5m in 2014.
Cash flow from operations/cash flow to shareholders
Administrative expenses increased by 21.5% or EUR 2.9m to EUR 16.4m. The increase is mainly due to redundancy costs of EUR 1m, the inclusion of the salary part from the cost of the SimCorp Coric acquisition, and other non-recurring transaction costs totaling EUR 1.2m.
SimCorp generated EBIT of EUR 57.3m in 2014 compared to EUR 54.3m in 2013, an increase of EUR 3.0m. This was the result of an increased focus on efficiency gains and increased revenue from both new and additional licenses and professional services. The EBIT margin was negatively impacted by 1%-point by the inclusion of SimCorp Coric and fell from 24.1% in 2013 to 23.8% in 2014. The negative EBIT margin impact of the SimCorp Coric acquisition is of a nonrecurring character. Exchange rate fluctuations for the year had a negative net impact of 0.3%-points on the EBIT margin.
Cash holdings and foreign exchange adjustments generated financial income of EUR 1.8m. Financial expenses, primarily relating to foreign exchange adjustments, amounted to EUR 1.6m.
Continuing operations thus generated a before tax profit for the year of EUR 57.5m against EUR 54.0m in 2013.
The tax charge for 2014 amounted to EUR 15.9m against EUR 14.7m in 2013. The effective tax rate was 27.7% compared to 27.2% in 2013.
The Group profit after tax for the year was thus EUR 41.6m against EUR 39.3m in 2013. After EUR 1.0m of foreign currency translation differences and other items, total comprehensive income for the year amounted to EUR 42.5m against EUR 37.8m in 2013.
SimCorp had total assets of EUR 127.8m at 31 December 2014 compared to total assets of EUR 117.5m at 31 December 2013. Cash holdings amounted to EUR 38.0m, or EUR 9.1m less than at the year-earlier date. Total receivables stood at EUR 58.0m at 31 December 2014 against EUR 49.3m at 31 December 2013. SimCorp has not recorded any provisions for bad debts in either 2014 or 2013.
The Group's non-current assets were EUR 9.5m higher compared to 2013 to stand at EUR 25.5m at 31 December 2014. Goodwill was EUR 4.3m at 31 December 2014, which was an increase of EUR 3.5m from last year. The carrying amount of acquired software increased from EUR 0.4m to EUR 3.9m and the value of customer contracts was EUR 3.4m at the end of 2014 against a carrying value of nil at the same time in 2013. Deferred tax assets increased by EUR 0.8m to EUR 7.0m. Property, plant, and equipment amounted to EUR 4.6m against EUR 4.8m in 2013.
The Group's equity increased during the year from EUR 71.6m to EUR 73.4m. Comprehensive income amounted to EUR 42.5m against EUR 37.8m last year. The net effect from the sale of employee shares and share-based payments related to stock options was EUR 5.9m, compared to EUR 10.9m in 2013, and increased equity by EUR 5.9m. Dividend payments of EUR 22.1m against EUR 20.1m last year and purchases of treasury shares of EUR 24.5m against EUR 42.9m in 2013 reduced equity by EUR 46.6m in 2014 compared to EUR 63.0m in 2013.
Operating activities generated a net cash inflow of EUR 44.4m against EUR 47.5m last year and there was a net cash outflow of EUR 8.9m from investing activities compared to EUR 2.8m in 2013 reflecting the investment made on the acquisition of SimCorp Coric in March 2014. SimCorp thus generated a net cash inflow from operations and investments of EUR 35.5m against EUR 44.6m in 2013.
Investment activities in improved technological infrastructure comprised purchases of computing and communication equipment of EUR 2.4. Another EUR 6.9m was paid as part of the cost of SimCorp Coric.
SimCorp purchased 968,910 treasury shares with a nominal value of DKK 1 in 2014 at an average price of DKK 187,88 per share of DKK 1. SimCorp delivered 101,326 treasury shares with a nominal value of DKK 1 on the exercise of employee stock options and the vesting of restricted stock units. Further, 5,835 treasury shares were delivered as remuneration to the Board of Directors in accordance with a resolution adopted by shareholders at the annual general meeting 2014.
At 31 December 2014 SimCorp held 1,002,252 treasury shares with a nominal value of DKK 1 each (2,4% of the total share capital) at a cost of EUR 25.3m and a market value of EUR 21.9m. At 31 December 2013, SimCorp held 2,147,241 treasury shares with a nominal value of DKK 1 each equivalent to 4.9% of total share capital, with a purchase cost of EUR 47.4m and a market value of EUR 61.4m.
In 2014, the parent company generated revenue of EUR 100.5m, an increase of EUR 7.5m compared to 2013. The parent company received dividends totaling EUR 30.0m from subsidiaries in 2014 compared to EUR 25.7m in 2013. Profit after tax for the year was EUR 46.2m against EUR 37.5m in 2013. Equity increased by EUR 5.7m to EUR 62.7, including share capital of EUR 5.6m, retained earnings of EUR 32.5m, and a proposed dividend of EUR 24.6m.
The Board of Directors intends to recommend to shareholders at the annual general meeting that, of the total recognized comprehensive income of EUR 46.4m, dividends of EUR 24.6m be declared, representing DKK 4.50 per share of DKK 1, and that EUR 21.7m be transferred to retained earnings.
Q4 2014 turned out to be a 'better-than-expected' quarter with revenue of EUR 76.9m – EUR 9.4m higher than Q4 2013 and the highest quarterly revenue in SimCorp's history, while EBIT of EUR 28.4m, an increase of EUR 5.9m, also represents the best quarter ever for SimCorp.
In particular, revenue from additional licenses was strong in Q4 2014 with a total revenue of EUR 21.7m up 43% compared with last year. Revenue from new licenses also increased significantly in Q4 2014 to EUR 4.3m – an increase of EUR 2.1m compared to Q4 2013. Professional services was slightly lower in Q4 2014 at EUR 21.5m compared to EUR 22.7m in Q4 2013. Maintenance increased as expected by 5% from EUR 27m in Q4 2013 to EUR 28.3m in Q4 2014.
| EURm | Q4 2014 | Q4 2013 | Change |
|---|---|---|---|
| License revenue | 4.3 | 2.1 | 104% |
| Extra sales | 21.7 | 15.2 | 43% |
| Professional services | 21.5 | 22.7 | -5% |
| Maintenance | 28.3 | 27.0 | 5% |
| Other | 1.1 | 0.5 | 120% |
| Total revenues | 76.9 | 67.5 | 14% |
| Total costs | 48.5 | 45.0 | 8% |
| EBIT | 28.4 | 22.5 | 26% |
"Our partnership with SimCorp has been highly valuable in enhancing the functionality and scalability of our global operating platform. SimCorp Dimension has become an important part of Schroders' IT architecture which in turn has successfully supported the firm's material growth of assets under management."
– Mike Pavey, Head of Group Portfolio Services, Schroder Investment Management
Most units experienced high activity levels, which resulted in eight new SimCorp Dimension clients in 2014 and a satisfactory pipeline for 2015.
Jamie Corrigan Executive Vice President, SimCorp North America Present position since 2014
North America decreased total revenue by 8.3% in 2014. The negative development is the result of not signing new clients. Professional services fell by 6.5%, which is acceptable taking into consideration that no new clients were signed in 2014. Maintenance income grew by 14.7%. The value of the total installed license base increased by USD 2m to USD 79m at the end of 2014.
Peter Hill Senior Vice President, SimCorp Ltd. Present position since 2014
UK delivered a weak performance in 2014 compared to the year prior. Total license revenue fell by 51.7% compared to 2013. Professional services grew modestly by 4.7% – which in light of the reduced license fee revenue constitutes a satisfactory performance. The total installed license base grew by GBP 2m to GBP 39m at the end of 2014.
Arnt Eilertsen Senior Vice President, SimCorp Nordic Present position since 2001
Nordic – SimCorp's most mature market – grew by 4.3% in 2014, primarily driven by additional software licenses sold to existing customers and a continued strong demand for professional services with existing clients. The installed license base grew by DKK 29m to DKK 1.052m at the end of 2014.
| USDm | 2014 | 2013 | Change |
|---|---|---|---|
| Total revenue | 46.6 | 50.5 | -8% |
| – License fees | 9.1 | 12.5 | -27% |
| – Professional services 25.7 | 27.7 | -7% | |
| – Maintenance income | 11.7 | 10.2 | 15% |
| – Training activities etc | 0.1 | 0.2 | -44% |
| New wins | 0 | 2 | |
| Market share | 4% | 4% | Unchanged |
| SimCorp clients | 20 | 20 | Unchanged |
| Number of employees | 101 | 106 | -5% |
| GBPm | 2014 | 2013 | Change |
|---|---|---|---|
| Total revenue | 14.1 | 17.1 | -15% |
| – License fees | 2.9 | 6.0 | -52% |
| – Professional services | 4.5 | 4.3 | 4% |
| – Maintenance income | 6.9 | 6.6 | 5% |
| – Training activities etc | 0.3 | 0.2 | 66% |
| New wins | 1 | 2 | |
| Market share | 13% | 13% | Unchanged |
| SimCorp clients | 20 | 20 | Unchanged |
| Number of employees | 54 | 53 | 2% |
| DKKm | 2014 | 2013 | Change |
|---|---|---|---|
| Total revenue | 418.3 | 400.9 | 4% |
| – License fees | 63.3 | 59.2 | 7% |
| – Professional services 141.9 | 134.8 | 5% | |
| – Maintenance income 211.5 | 205.6 | 3% | |
| – Training activities etc | 1.6 | 1.3 | 23% |
| New wins | 0 | 1 | |
| Market share | 67% | 70% | -3% |
| SimCorp clients | 47 | 48 | -2% |
| Number of employees | 89 | 87 | 2% |
North America Staff 101
Hans Otto Engkilde Emanuell Colson Senior Vice Presidents, SimCorp Western Europe Present positions since 2013
Performance in Western Europe was strong in 2014 with total revenue growing 34.2%. One new client was signed in the French market, while the Dutch and the Luxembourg market also both signed one new client each. Sales to existing clients was strong in 2014 lifting total license revenue almost three times. Professional service revenue mirrored the increased activity in license sales and grew by 21.1%. Maintenance income fell 5% compared to 2013 as a result of a client cancellation in 2013 (EUR 0.8m). The total installed license base grew by EUR 14m to EUR 90m at the end of 2014.
| EURm | 2014 | 2013 | Change |
|---|---|---|---|
| Total revenue | 36.9 | 27.6 | 34% |
| – License fees | 12.0 | 4.1 | 191% |
| – Professional services 10.0 | 9.0 | 21% | |
| – Maintenance income | 13.3 | 14.0 | -5% |
| – Training activities etc | 0.7 | 0.4 | 75% |
| New wins | 4 | 1 | |
| Market share | 13% | 11% | 18% |
| SimCorp clients | 22 | 18 | 22% |
| Number of employees | 78 | 65 | 20% |
Ralf Schmücker Senior Vice President, SimCorp Central Europe Present position since 2012
Central Europe increased its total revenue by 3.1% and the total value of the installed license base increased by EUR 16m to EUR215m. License fee revenue was unchanged as was revenue from professional services. Maintenance income continued to grow as a result of clients going live and taking functionality into use.
| EURm | 2014 | 2013 | Change |
|---|---|---|---|
| Total revenue | 70.6 | 68.5 | 3% |
| – License fees | 12.3 | 12.3 | 0% |
| – Professional services 18.8 | 18.9 | -0.5% | |
| – Maintenance income | 37.8 | 36.0 | 5% |
| – Training activities etc | 1.7 | 1.3 | 31% |
| New wins | 3 | 1 | |
| Market share | 25% | 24% | 4% |
| SimCorp clients | 50 | 48 | 4% |
| Number of employees | 162 | 148 | 9% |
Nick Quin Senior Vice President, SimCorp Asia Present position since 2014
AUD 72m at the end of 2014.
Asia In Asia total revenue increased by 13.7% mainly as a result of a weak comparison year in 2013. No new clients were signed in 2014. Professional services grew 6.5% and maintenance revenue grew by 15% as a result of clients going live in 2014. The total value of the installed license base increased by AUD 5m to
| 2014 | ||
|---|---|---|
| Change | ||
| 14% | ||
| 2.2 | 1.7 | 33% |
| 6.6 | 6.2 | 6% |
| 16.1 | 14.0 | 15% |
| 0.0 | 0.0 | |
| 0 | 0 | |
| 11% | 11% | Unchanged |
| 12 | 12 | Unchanged |
| 31 | 34 | -9% |
| 24.9 | 2013 21.9 |
SimCorp's Board of Directors has reviewed and discussed each of the recommendations for corporate governance issued by NASDAQ OMX Copenhagen A/S and has concluded that with a few exceptions SimCorp is in full compliance with the recommendations.
SimCorp's corporate governance guidelines provide the overall direction for SimCorp's Board of Directors and executive management team in their definition of working procedures and principles. The guidelines are intended to ensure an efficient and adequate management of SimCorp within the framework defined by applicable legislation, rules, and recommendations for listed companies in Denmark and by SimCorp's articles of association, mission, corporate vision, and values.
In a limited number of areas, SimCorp has decided not to comply with the Corporate Governance recommendations issued by NASDAQ OMX Copenhagen A/S. In these cases SimCorp considers that the limited size and/or complexity of its business do not warrant full compliance with the recommendations. Consequently, SimCorp is not in full compliance on the matters of separate nomination and remuneration committees.
On the subject of nomination, the Chairman, the Vice Chairman, and the CEO are asked by the Board of Directors
SimCorp's Corporate Governance guidelines and the statutory corporate governance statement pursuant to section 107 b of the Danish Financial statements Act for the financial year 2014 are available on the company's website at www.simcorp.com/corpgov2014uk
to identify new, potential Board members. The Board of Directors discusses and decides collectively who are to be nominated by the Board of Directors for election by the shareholders in Annual General Meeting.
SimCorp's remuneration policy, which is available on the company's website, lays out a clear description of SimCorp's remuneration principles and procedures and as such, SimCorp has decided that a remuneration committee is not required in SimCorp as this would add unneccessary cost and complexity to the current operating model.
SimCorp's management objective is, in all respects, to promote the long-term interests of the company, and thus of all stakeholders. The objective of creating long-term value assumes, among other things, that SimCorp establishes lasting and constructive relationships with the Group's primary stakeholders: shareholders, clients, employees, and suppliers.
The Board of Directors is a collective body for promoting the long-term interests of the company in all respects. The Board of Directors is responsible for ensuring that the overall strategic management and the financial and managerial control of the Group are conducted adequately in all respects. Thus, the Board of Directors acts as a sparring partner to
the Executive Management Board in relation to strategic initiatives and monitors the Group's financial condition, risk management, and business activities on an ongoing basis.
The Board of Directors is constituted so as to ensure its independence of any special interests. Thus, the Board of Directors consists of a number of members sufficient to enable an appropriate distribution of tasks among them, as well as to ensure an effective and rapid decision-making process.
As provided in the company's articles of association, Sim-Corp's Board of Directors consists of between three and six members elected by the company's shareholders in addition to members elected by and among the company's employees. The Board currently consists of five members elected by
the shareholders and two members elected by the employees. Independent members of SimCorp's Board of Directors are elected for one year at a time and employee-elected members for three years. In terms of gender diversity in the Board of Directors, the company has set a target to have at least one female director elected by the general meeting to the Board of Directors.
Annually the Board of Directors carries out a self-assesment. In 2014 the self-assessment process took place in December and comprises an evaluation of the work and contribution of the Executive Management Board and the Board of Directors within the areas of strategy, finance, risk management, sales, organization and management and operations. Based on the self-assesment it was concluded that the Board's collective work is efficient and that the competences described in the ideal profile are represented by the aggregate competences of the Board of Directors.
The Board of Directors has the overall responsibility for ensuring that SimCorp maintains appropriate procedures to monitor, measure, and manage the company's risks and that such procedures are firmly embedded in the company's organization. A general description of risks is provided in the section 'Risk management' on page 20. As part of its risk management, the Executive Management Board and the Board have defined a risk statement outlining the most critical risks to SimCorp and the proposed mitigation actions. Further, the company has established a whistleblower body, authorized by the Danish Data Protection Agency, which, in
addition to usual control functions, is intended to provide access to reporting on suspected irregularities in the business.
Corporate Social Responsibility in SimCorp is firmly based on the Group's core values and SimCorp's 'Corporate Governance Guidelines' as adopted by SimCorp's Board of Directors. SimCorp's commitment to sustainable development of the company is based on combining financial performance with socially responsible behavior and environmental awareness. SimCorp does not have an explicit, separate CSR policy, but aims to maintain and enhance its professional and commercial relations with internal and external stakeholders based on mutual respect. The company's approach to Corporate Social Responsibility is described in more detail in the document entitled Corporate Social Responsibility posted on the company's website.
On the subject of diversity, SimCorp's approach is described in SimCorp's Diversity Policy, which is included in SimCorp's Corporate Governance guidelines and the Diversity Activity Plan, both available on the company's website.
In 2014 SimCorp's total management team took part in a diversity workshop, reviewing diversity and inclusion in the SimCorp workplace. In addition, focus groups were held in all units to further discuss the topic. Based on the feedback from these sessions, SimCorp's Human Resource Department has defined a number of areas to work with in the future.
The statutory corporate social responsibility statement pursuant to section 99 a of the Danish Financial Statements Act for the financial year 2014 is available on the company's website at www.simcorp.com/csr2014uk
SimCorps Diversity Activity Plan is available on the company's website at www.simcorp.com/diversity2014
31 December
Business address: SimCorp A/S, Weidekampsgade 16, 2300 Copenhagen S, Denmark
Personal and educational background Born 1965, US citizen, B.S. Industrial Engineering, MSc. (Applied Economics and Finance)
Employee-elected member of SimCorp A/S' Board of Directors since 2009.
Documentation Consultant in SimCorp A/S. Is not regarded as independent due to employment with SimCorp A/S.
Business address: Wellcome Trust, 215 Euston Road, London NW1 2BE, United Kingdom
Personal and educational background Born 1952, British citizen, B.Com (Hons) from University of Cape Town, CA(SA), FCA, CPA.
Member of SimCorp A/S' Board of Directors since 2011. Chairman of the Audit Committee of SimCorp A/S since 2013. Director and Chairman of the Audit Committee of the Board of Directors of Henderson International Income Trust. Member of the Board of Directors of Aon Limited, Wellcome Trust Finance plc. and St. James's Place plc.
Chief Operating Officer of the Wellcome Trust. Is regarded as independent.
Business address: Skovshovedvej 27B, 2920 Charlottenlund, Denmark
Personal and educational background Born 1948, Danish citizen, MSc (Econ.)
Vice Chairman of SimCorp A/S' Board of Directors since 2012. Chairman of the Board of Directors of DSB SOV and Copenhagen Business School. Vice chairman of the Board of Directors of Nordeafonden. Member of the Board of Directors of Bestyrelsesforeningen, Gösta Enboms Fond and Dronning Margrethe den II's Arkæologiske Fond. Member of the Industrial Board of Axcel and member of The Systemic Risk Council. Chairman of the investment committee of the Danish Climate Investment Fund.
Independence Is regarded as independent.
Business address: SimCorp A/S, Weidekampsgade 16, 2300 Copenhagen S, Denmark
Personal and educational background Born 1970, Danish citizen, MSc (Math. and Econ.).
Employee-elected member of SimCorp A/S' Board of Directors since 2007.
Chief Business Consultant in SimCorp A/S. Is not regarded as independent due to employment with SimCorp A/S.
Business address: 24, The Crescent, London SW13 0NN
Personal and educational background Born 1969, Irish citizen, B.Com (Hons) from University College, Cork, MBA from Harvard Business School
Member of SimCorp A/S' Board of Directors since 2014.
Adviser to Ernst & Young on risk and regulation Is regarded as independent.
Business address: Novo Nordisk A/S, Novo Allé, 2880 Bagsværd, Denmark
Personal and educational background Born 1963, Danish citizen, MSc (Econ. and Audit.) and MBA from Copenhagen Business School.
Chairman of SimCorp A/S' Board of Directors since 2008 and Vice Chairman from 2007 to 2008. Also Chairman of the Board of Directors of NNIT A/S.
Executive Vice President and CFO of Novo Nordisk A/S. Is regarded as independent.
Business address: AMADEUS S.A.S, 485 Route du Pin Montard, 06902 Sophia Antipolis Cedex, France
Personal and educational background Born 1958, French citizen, MSc (Industrial Engineering) from École Centrale de Paris.
Member of SimCorp A/S' Board of Directors since 2008.
Executive Vice President in Amadeus S.A.S. Is regarded as independent
31 december
Jens Olivarius Born 1969 Senior Vice President, Group Marketing & Communications Present position held since 2014 Elise Hauge Born 1967 Senior Vice President, Group Human Resources Present position held since 2014
James Corrigan Born 1976 Managing Director, SimCorp North America Present position held since 2014
Born 1961 Chief Executive Officer Present position held since 2012 Member of SimCorp A/S' Executive Management Board Chairman of the Board of Directors of EG A/S Member of the supervisory Board of Industriens Arbejdsgivere i København and The Scandinavian Golf Club
Management report Group Management Committee
Thomas Johansen Born 1970 Chief Financial Officer Present position held since 2011 Member of SimCorp A/S' Executive Management Board
Henrik Schlægel Born 1958 Executive Vice President, SimCorp Global Services Present position held since 2013 Jochen Müller Born 1966 Executive Vice President, SimCorp EMEA Present position held since 2012
Born 1966 Chief Technology Officer Present position held 2009 Member of SimCorp A/S' Executive Management Board Chairman of the Board of Directors of Dyalog Ltd.
In 2014 liquidity as measured by average daily trading volume was up by 24% to EUR 1.7m and the average daily number of trades increased by 15% to 374. SimCorp's share price decreased by 24%
The share price at 31 December 2014 was DKK 162.50 per share, equal to a market capitalization of EUR 0.9bn (DKK 6.7bn). The share price decreased by 24% in 2014. By comparison, the NASDAQ OMX Copenhagen A/S blue chip index (OMXC20 CAP) rose by 18%, while the index for mediumsized companies (OMXC Mid Cap), of which the SimCorp share is a component, rose by 5%.
Relative to 2013, the average daily turnover of SimCorp shares on NASDAQ OMX Copenhagen A/S rose by 24% to EUR 1.7m and the average number of trades per day increased by 15% to 374.
SimCorp's nominal share capital is DKK 41,500,000 divided into 41,500,000 shares of DKK 1 following a capital reduction of DKK 2,000,000, 13 June 2014.
At 31 December 2014, SimCorp had around 6,800 registered shareholders representing more than 91% of the company's share capital, a decrease of approximately 400 registered shareholders during the year.
Approximately 54% of the share capital was held or managed by the 25 largest shareholders and more than 57% of the
registered share capital was held by shareholders based outside Denmark, unchanged from 31 December 2013.
At 31 December 2014, around 6% of the company's share capital was held by the company's management and by approximately 600 employees. Furthermore, SimCorp estimates that Danish and foreign institutional investors held some 65% of the company's shares, a slight decrease from approximately 66% at year-end 2013.
Around 26% of SimCorp shares were managed by investors who are also clients of SimCorp. The company held 2.4% of the shares as treasury shares at year-end 2014.
In accordance with section 55 of the Danish Companies Act, the following investors have reported holding more than 5% of SimCorp's share capital:
In accordance with the remuneration policy, approved by the shareholders at the annual general meeting on 1 April 2014, the Board of Directors approved a share based incentive program based on restricted stock units. The fair value of the
In addition, 144,718 restricted stock units of DKK 1 relating to the corporate bonus program for 2013 were granted in 2014 and distributed among employees in the Group, including 6,179 restricted stock units to the Executive Management Board and 1,084 restricted stock units to employee-elected members of the Board of Directors. The restricted stock units will vest one third after one year, a further one third after two years and the last third after three years subject to vesting conditions.
The share-based incentive program based on restricted stock units will continue in 2015 and comprises restricted stock units with a market value of approximately EUR 2.6m on the date of grant. Treasury shares will be acquired to cover the program obligations. SimCorp's share based incen-
tive schemes are further detailed in note 6 to the financial statements. In accordance with SimCorp's remuneration policy, which is available on the company's website, members of the Board of Directors will in 2015 continue to receive SimCorp shares with a total value equal to one third of their total remuneration.
2011 2012 2013 2014
2010
Restriction in voting rights No
EUR
It is the assessment of the Board of Directors that these remuneration principles ensure an appropriate alignment of the interests of the Board of Directors with SimCorp's shareholders in general.
As at 31 December 2014, the seven members of the company's Board of Directors held a total of 126,079 SimCorp shares and 1,084 restricted stock units. The three members of the Group's Executive Management Board held a total of 186,300 SimCorp shares and 189,123 restricted stock units.
Additional information on the holdings of SimCorp shares and restricted stock units by members of the Board of Directors, the Executive Management Board, and other related parties is disclosed in note 28 to the financial statements.
The annual general meeting of SimCorp A/S will be held on: Monday, 23 March 2015, at 15:00 at SimCorp's headquarters, Weidekampsgade 16, Copenhagen, Denmark.
To ensure continuity in the composition of the Board of
%
Directors, the five members elected by the shareholders who are currently serving on the Board of Directors will stand for re-election at SimCorp's annual general meeting. Brief biographies of the current members of the Board of Directors are found on pages 38–39.
The Board of Directors intends to propose that the total remuneration to the Board of Directors for the financial year 2015 remains unchanged from 2014. The remuneration comprises cash of EUR 0.34m (DKK 2.5m), representing two thirds of the total remuneration, and SimCorp shares with a market value of around EUR 0.17m (DKK 1.25m), representing one third of the remuneration, totalling EUR 0.50m (DKK 3.75m). See 'Remuneration of Board of Directors, Executive Management and Employees' on the company's website.
The Board of Directors further intends to propose that the shareholders authorize the company to acquire treasury shares of up to 10% of the company's share capital. See section 198 of the Danish Companies Act.
The agenda for the annual general meeting including proposed resolutions will be published on Friday, 27 February 2015, on which date the notice convening the meeting will be sent by email to all registered shareholders.
Maintaining a composition of assets that does not raise questions about the company's financial stability is vital to SimCorp's continued international expansion. Management believes this objective will be achieved when the cash holdings and committed credit lines exceed 10% of the projected costs for the coming year. On this assumption, the company intends to pay dividends of at least 50% of the profit on ordinary activities after tax. Additionally, cash will be used to buy treasury shares provided the company does not anticipate specific cash requirements. The purchase of treasury shares will be executed in terms of safe harbour programs.
The Board of Directors has considered SimCorp's cash position and liquidity forecast, and on the basis thereof, the Board of Directors intends to recommend to the shareholders at the annual general meeting that dividends of EUR 24.6m, equal to DKK 4.50 per share of DKK 1, be distributed for the financial year 2014, corresponding to a payout ratio of 59%. In order to be eligible for dividends, shares must be registered on or before 23 March 2015. The ex-dividend date is 24 March 2015.
Dividends for the financial year 2014 are expected to be paid on 26 March 2015. Based on the current business outlook and the cash position, SimCorp will continue with its share buyback program during 2015 for an expected EUR 20m and will initiate a new "Safe Harbour" program and acquire treasury shares for an amount of EUR 10m before the release of the half-year report 2015.
SimCorp pursues an open dialogue with investors and analysts about the company's business and financial performance. In order to ensure that all SimCorp's stakeholders have equal access to corporate information, news is released to NASDAQ OMX Copenhagen A/S, the media, and on Sim-Corp's website, where users can also subscribe to SimCorp's news service. SimCorp's Investor Relations team handles all contact with investors and the press on issues relating to the company's shares.
Please contact: Thomas Johansen, Chief Financial Officer, Telephone: +45 35 44 88 00, [email protected], www.simcorp.com
Announcements to NASDAQ OMX Copenhagen in 2014, can be found at www.simcorp.com/investors
| 23 Mar 2015 | Annual General Meeting | |
|---|---|---|
| 26 Mar 2015 | Expected date for payout of dividend | |
| 8 May 2015 | Publication of interim financial report Q1 2015 | |
| 18 Aug 2015 | Publication of interim financial report H1 2015 | |
| 6 Nov 2015 | Publication of interim financial report for the first | |
| nine months of 2015 |
The Board of Directors and the Executive Management Board have today considered and approved the annual report for 2014 of SimCorp A/S.
The annual report has been prepared in accordance with the International Financial Reporting Standards as adopted by the EU and Danish disclosure requirements for listed companies. In our opinion, the consolidated financial statements and the parent company financial statements give a true and fair view of the Group's and the parent company's assets, liabilities and financial position as of 31 December 2014 and of the results of the parent company's and the Group's operations and cash flows for the financial year 1 January to 31 December 2014.
In our opinion the Management report gives a true and fair view of developments in the activities and financial position of the Group and the parent company, the results for the year and the financial position of the Group and the parent company, as well as a description of the significant risk and uncertainty factors that may affect the Group and the parent company.
We recommend that the annual report be adopted by the shareholders at the annual general meeting.
Copenhagen, 16 February 2015
Klaus Holse Chief Executive Officer
Board of Directors
Jesper Brandgaard Chairman
Patrice McDonald
Georg Hetrodt Chief Technology Officer
Thomas Johansen Chief Financial Officer
Peter Schütze Vice chairman
Jacob Goltermann Employee-elected
Hervé Couturier
Raymond John Employee-elected
Simon Jeffreys
We have audited the Consolidated Financial Statements and the Parent Company Financial Statements of SimCorp A/S for the financial year 1 January to 31 December 2014, pp 48-95, which comprise income statement and statement of comprehensive income, balance sheet, statement of changes in equity, cash flow statement and notes, including summary of significant accounting policies, for the Group as well as for the Parent Company. The Consolidated Financial Statements and the Parent Company Financial Statements are prepared in accordance with International Financial Reporting Standards as adopted by the EU and Danish disclosure requirements for listed companies
Management is responsible for the preparation of Consolidated Financial Statements and Parent Company Financial Statements that give a true and fair view in accordance with International Financial Reporting Standards as adopted by the EU and Danish disclosure requirements for listed companies, and for such internal control as Management determines is necessary to enable the preparation of Consolidated Financial Statements and Parent Company Financial Statements that are free from material misstatement, whether due to fraud or error.
Our responsibility is to express an opinion on the Consolidated Financial Statements and the Parent Company Financial Statements based on our audit. We conducted our audit in accordance with International Standards on Auditing and additional requirements under Danish audit regulation. This requires that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the Consolidated Financial Statements and the Parent Company Financial Statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the Consolidated Financial Statements and the Parent Company Financial Statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the Consolidated Financial Statements and the Parent Company Financial Statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company's preparation of Consolidated Financial Statements and Parent Company Financial Statements that give a true and fair view in
order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by Management, as well as evaluating the overall presentation of the Consolidated Financial Statements and the Parent Company Financial Statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
The audit has not resulted in any qualification.
In our opinion, the Consolidated Financial Statements and the Parent Company Financial Statements give a true and fair view of the Group's and the Parent Company's financial position at 31 December 2014 and of the results of the Group's and the Parent Company's operations and cash flows for the financial year 1 January to 31 December 2014 in accordance with International Financial Reporting Standards as adopted by the EU and Danish disclosure requirements for listed companies.
We have read Management's Review, pp 1-45, in accordance with the Danish Financial Statements Act. We have not performed any procedures additional to the audit of the Consolidated Financial Statements and the Parent Company Financial Statements. On this basis, in our opinion, the information provided in Management's Review is consistent with the Consolidated Financial Statements and the Parent Company Financial Statements.
Copenhagen, 16 February 2015
Statsautoriseret Revisionspartnerselskab
Fin T. Nielsen State Authorized Public Accountant
Mikkel Sthyr State Authorized Public Accountant
| Income statement and statement of comprehensive income Cash flow statement |
50 51 |
|
|---|---|---|
| Balance sheet | 52 | |
| Statement of changes in equity | 54 | |
| NOTES | ||
| BASIS OF PREPARATION | ||
| 1 | Accounting policies, estimates and assessments | 56 |
| INCOME STATEMENT | ||
| 2 | Revenue by type of service | 59 |
| 3 | Segment allocation | 60 |
| 4 | Future revenue, rental of software | 61 |
| 5 | Staff, board and executive management remuneration | 61 |
| 6 | Share-based remuneration | 63 |
| 7 | Impairment, amortization and depreciation | 67 |
| 8 | Auditors' remuneration | 68 |
| 9 | Share of profit after tax in associates | 68 |
| 10 | Financial income | 69 |
| 11 | Financial expenses | 69 |
| 12 | Tax | 70 |
| 13 | Earnings per share | 70 |
| BALANCE SHEET | ||
| 14 | Intangible assets and property, plant and equipment | 71 |
| 15 | Investments in, and receivables from, associates and subsidiaries | 75 |
| 16 | Acquisition of enterprises | 77 |
| 17 | Deposits | 78 |
| 18 | Deferred tax and changes in temporary differences during the year | 79 |
| 19 | Receivables | 80 |
| 20 | Equity, treasury shares and dividend | 81 |
| 21 | Provisions | 83 |
| 22 | Pensions and similar liabilities | 85 |
| 23 | Trade payables and other payables | 87 |
| 24 | Income tax | 87 |
| 25 | Contracts in progress relating to professional services | 88 |
| 26 | Operating leases | 88 |
| OTHER NOTES | ||
| 27 | Contingent liabilities and other financial liabilities | 89 |
| 28 | Related party transactions | 89 |
| 29 | Financial instruments and risk | 91 |
| 30 | Events after the balance sheet date | 95 |
| 31 | New accounting regulations | 95 |
| 32 | Adjustments, cash flow | 95 |
| 33 | Segment allocation reconciliation of the profit before tax | 95 |
The forward-looking statements regarding the Group's future financial situation involve factors of uncertainty and risk, which could cause actual developments to deviate from the expectations indicated. Such forward-looking statements are not guarantee of future performance. They involve risk and uncertainty, and the actual performance may deviate materially from that expressed in such forward-looking statements due to a variety of factors. The principal factors of uncertainty and risk are dealt with in further detail under the heading "risk management" on page 20 and in note 29, "Financial instruments and risk" in this annual report. Readers are warned not to rely unduly on the forward-looking statements. The Group's revenue will continue to be impacted by relatively few, but large system orders, and such orders are expected to be won at relatively irregular intervals. The terms agreed in the individual license agreements will determine the impact on the order book and on license revenue recognized for any specific financial reporting period. Accordingly, license revenue is likely to vary considerably from one quarter to the next. Unless required by law or corresponding obligations, SimCorp A/S in under no duty and undertakes no obligation to update or revise forward-looking statements after the distribution of this document, whether as a result of new information, future events or otherwise.
| 2013 | 2014 | 2013 | 2014 | |
|---|---|---|---|---|
| EUR '000 | EUR '000 | Note | EUR '000 | EUR '000 |
| INCOME STATEMENT | ||||
| 92,983 | 100,533 | 2, 3, 4 Revenue | 225,129 | 241,069 |
| 27,774 | 28,862 | 5, 6, 7 Cost of sales | 80,883 | 89,327 |
| 65,209 | 71,671 | Gross profit | 144,246 | 151,742 |
| 18,403 | 21,457 | Other operating income | 52 | 176 |
| 45,407 | 44,267 | 5, 6, 7 Research and development costs | 49,548 | 50,803 |
| 7,586 | 8,205 | 5, 6, 7 Sales and distribution costs | 26,980 | 27,453 |
| 14,467 | 17,329 | 5, 6, 7, 8 Administrative expenses | 13,534 | 16,399 |
| 16,152 | 23,327 | Profit from operations (EBIT) | 54,236 | 57,263 |
| - | - | 9 Share of profit after tax in associates | -111 | 50 |
| 27,798 | 30,841 | 10 Financial income | 2,375 | 1,819 |
| 2,151 | 1,257 | 11 Financial expenses | 2,494 | 1,616 |
| 41,799 | 52,911 | Profit before tax | 54,006 | 57,516 |
| 4,258 | 6,731 | 12 Tax on the profit for the year | 14,670 | 15,933 |
| 37,541 | 46,180 | Profit for the year | 39,336 | 41,583 |
| Earnings per share | ||||
| 13 Basic earnings per share of DKK 1 - EPS (EUR) | 0.93 | 1.02 | ||
| 13 Diluted earnings per share of DKK 1 - EPS-D (EUR) | 0.92 | 1.00 |
| 2013 | 2014 | 2013 | 2014 | |
|---|---|---|---|---|
| EUR '000 | EUR '000 | Note | EUR '000 | EUR '000 |
| STATEMENT OF COMPREHENSIVE INCOME | ||||
| 37,541 | 46,180 | Profit for the year | 39,336 | 41,583 |
| Other comprehensive income | ||||
| Items that will not be reclassified subsequently to the income statement: | ||||
| – | – | Actuarial gain/loss on defined benefit pension plans | -487 | -520 |
| – | – | Tax | 127 | 139 |
| Items that will be reclassified subsequently to the income | ||||
| statement, when specific conditions are met: | ||||
| -18 | 192 | Foreign currency translation differences for foreign operations | -1,212 | 1,339 |
| -18 | 192 | Other comprehensive income after tax | -1,572 | 958 |
| 37,523 | 46,372 | Total comprehensive income | 37,764 | 42,541 |
| Proposed distribution | ||||
| 22,174 | 24,648 | Dividend | ||
| 15,349 | 21,724 | Transferred to retained earnings | ||
| 37,523 | 46,372 |
| 2013 | 2014 | 2013 | 2014 | |
|---|---|---|---|---|
| EUR '000 | EUR '000 | Note | EUR '000 | EUR '000 |
| 37,541 | 46,180 | Profit for the year | 39,336 | 41,583 |
| -16,067 | -16,997 | 32 Adjustments | 20,789 | 23,165 |
| 5,380 | -6,083 | Changes in working capital | 1,186 | -4,912 |
| 26,854 | 23,100 | Cash from operating activities before financial items | 61,311 | 59,836 |
| 1,003 | 265 | Financial income received | 973 | 187 |
| -524 | -599 | Financial expenses paid | -449 | -615 |
| -2,404 | -5,350 | 12 Income tax paid | -14,388 | -15,018 |
| 24,929 | 17,416 | Net cash from operating activities | 47,447 | 44,390 |
| 0 | -6,943 | 16 Purchase of subsidiaries | - | -6,943 |
| -2,032 | -1,769 | Share capital to subsidiaries | - | - |
| 2,391 | 0 | 15 Repayment of loan, subsidiaries | - | - |
| -422 | 0 | 15 Loan, associates | -422 | 0 |
| 0 | 422 | 15 Repayment of loan, associates | 0 | 422 |
| -76 | -377 | 14 Purchase of intangible fixed assets | -76 | -377 |
| -2,020 | -1,589 | 14 Purchase of property, plant and equipment | -2,331 | -2,054 |
| 0 | 9 | 14 Proceeds from sale of property, plant and equipment | 0 | 34 |
| -15 | -45 | 17 Purchase of financial assets | -64 | -63 |
| 4 | 0 | 17 Proceeds from sale of financial assets | 30 | 53 |
| 20 | 20 | 10 Dividends from associates | 20 | 20 |
| 25,709 | 30,016 | 10 Dividends from subsidiaries | - | - |
| 23,559 | 19,744 | Net cash from/used in investment activities | -2,843 | -8,908 |
| 48,488 | 37,160 | Net cash from operating and investment activities | 44,604 | 35,482 |
| 498 | 0 | Sale of employee shares | 498 | 0 |
| 6,580 | 62 | Exercise of options | 6,580 | 62 |
| -20,078 | -22,131 | Dividends paid | -20,078 | -22,131 |
| -42,850 | -24,455 | 20 Purchase of treasury shares | -42,850 | -24,455 |
| -55,850 | -46,524 | Net cash used in financing activities | -55,850 | -46,524 |
| -7,362 | -9,364 | Change in cash and cash equivalents | -11,246 | -11,042 |
| Total cash flows for the year | ||||
| 43,556 | 36,193 | Cash and cash equivalents at 1 January | 58,897 | 47,106 |
| 0 | 0 | Cash and cash equivalents acquired | 0 | 1,885 |
| -1 | -81 | Foreign exchange adjustment of cash and cash equivalents | -545 | 46 |
| 36,193 | 26,748 | Cash and cash equivalents at 31 December | 47,106 | 37,995 |
The Group has credit facilities with banks for EUR 10.0m (2013: EUR 10.0m).
| 2013 | 2014 | 2013 | 2014 | |
|---|---|---|---|---|
| EUR '000 | EUR '000 | Note | EUR '000 | EUR '000 |
| ASSETS | ||||
| Non-current assets | ||||
| 14 Intangible assets | ||||
| 0 312 |
0 374 |
Goodwill Software |
792 386 |
4,331 3,920 |
| 0 | 0 | Customer contracts | 0 | 3,426 |
| 312 | 374 | Total intangible assets | 1,178 | 11,677 |
| 14 Property, plant and equipment | ||||
| 1,642 | 1,213 | Leasehold improvements | 2,224 | 1,721 |
| 2,254 | 2,444 | Technical equipment | 2,431 | 2,722 |
| 18 | 6 | Other equipment, fixtures and fittings | 184 | 192 |
| 3,914 | 3,663 | Total property, plant and equipment | 4,839 | 4,635 |
| Other non-current assets | ||||
| 26,492 | 36,950 | 15 Investments in subsidiaries | - | - |
| 855 | 24 | 15 Investments in associates | 1,221 | 338 |
| 1,778 | 1,560 | 17 Deposits | 2,111 | 1,873 |
| 2,139 | 1,970 | 18 Deferred tax | 6,219 | 6,984 |
| 31,264 | 40,504 | Total other non-current assets | 9,551 | 9,195 |
| 35,490 | 44,541 | Total non-current assets | 15,568 | 25,507 |
| Current assets | ||||
| 16,610 | 22,360 | 19 Receivables | 49,336 | 57,994 |
| 422 | 0 | 15 Receivables from associates | 422 | 0 |
| 0 | 0 | 24 Income tax receivable | 1,223 | 1,667 |
| 2,089 | 2,070 | Prepayments | 3,814 | 4,644 |
| 36,193 | 26,748 | Cash and cash equivalents | 47,106 | 37,995 |
| 55,314 | 51,178 | Total current assets | 101,901 | 102,300 |
| 90,804 | 95,719 | Total assets | 117,469 | 127,807 |
| PARENT COMPANY | GROUP | |||
|---|---|---|---|---|
| 2013 | 2014 | 2013 | 2014 | |
| EUR '000 | EUR '000 | Note | EUR '000 | EUR '000 |
| LIABILITIES AND EQUITY | ||||
| Equity | ||||
| 5,844 | 5,575 | Share capital | 5,844 | 5,575 |
| 0 | 0 | Exchange adjustment reserve | -2,394 | -1,055 |
| 29,020 | 32,456 | Retained earnings | 45,942 | 44,208 |
| 22,174 | 24,652 | Proposed dividend | 22,174 | 24,652 |
| 57,038 | 62,683 | Total equity | 71,566 | 73,380 |
| Liabilities | ||||
| Non-current liabilities | ||||
| 0 | 0 | 18 Deferred tax | 213 | 513 |
| 1,218 | 1,219 | 21, 22 Provisions | 3,177 | 4,179 |
| 0 | 832 | Other debt | 0 | 1,480 |
| 1,218 | 2,051 | Total non-current liabilities | 3,390 | 6,172 |
| Current liabilities | ||||
| 152 | 176 | Prepayments from clients | 5,490 | 9,084 |
| 30,990 | 29,692 | 23 Trade payables and other payables | 33,498 | 35,539 |
| 647 | 984 | 24 Income tax | 2,640 | 3,424 |
| 14 | 133 | 21 Provisions | 140 | 208 |
| 745 | 0 | Employee bonds | 745 | 0 |
| 32,548 | 30,985 | Total current liabilities | 42,513 | 48,255 |
| 33,766 | 33,036 | Total liabilities | 45,903 | 54,427 |
| 90,804 | 95,719 | Total liabilities and equity | 117,469 | 127,807 |
EUR '000
| Note | Share capital |
Retained earnings |
Proposed dividends for the year |
Total | |
|---|---|---|---|---|---|
| Equity at 1 January 2013 | 20 | 6,045 | 45,567 | 19,965 | 71,577 |
| Comprehensive income for the year* | |||||
| Total comprehensive income for the year | 0 | 37,523 | 0 | 37,523 | |
| Transactions with owners | |||||
| Cancellation of treasury shares | -201 | 201 | 0 | 0 | |
| Dividends paid to shareholders | 0 | -108 | -19,965 | -20,073 | |
| Share-based payment, employee shares | 0 | 1,244 | 0 | 1,244 | |
| Share-based payment, options and shares | 0 | 8,918 | 0 | 8,918 | |
| Tax, share-based payment | 0 | 699 | 0 | 699 | |
| Purchase of treasury shares | 0 | -42,850 | 0 | -42,850 | |
| Proposed dividends to shareholders | 0 | -22,174 | 22,174 | 0 | |
| Equity at 31 December 2013 | 5,844 | 29,020 | 22,174 | 57,038 | |
| Equity at 1 January 2014 | 5,844 | 29,020 | 22,174 | 57,038 | |
| Comprehensive income for the year* | |||||
| Total comprehensive income for the year | 0 | 46,372 | 0 | 46,372 | |
| Transactions with owners | |||||
| Cancellation of treasury shares | -269 | 269 | 0 | 0 | |
| Dividends paid to shareholders | 0 | 43 | -22,174 | -22,131 | |
| Share-based payment and shares | 0 | 4,986 | 0 | 4,986 | |
| Tax, share-based payment | 0 | 873 | 0 | 873 | |
| Purchase of treasury shares | 0 | -24,455 | 0 | -24,455 | |
| Proposed dividends to shareholders | 0 | -24,652 | 24,652 | 0 | |
| Equity at 31 December 2014 | 5,575 | 32,456 | 24,652 | 62,683 |
* Please refer to Statement of comprehensive income on page 50.
EUR '000
| Note | Share capital |
Exchange adjustment reserve |
Retained earnings |
Proposed dividends for the year |
Total | |
|---|---|---|---|---|---|---|
| Equity at 1 January 2013 Comprehensive income for the year* |
20 | 6,045 | -1,182 | 61,036 | 19,965 | 85,864 |
| Total comprehensive income for the year | 0 | -1,212 | 38,976 | 0 | 37,764 | |
| Transactions with owners | ||||||
| Cancellation of treasury shares | -201 | 0 | 201 | 0 | 0 | |
| Dividends paid to shareholders | 0 | 0 | -108 | -19,965 | -20,073 | |
| Share-based payment, employee shares | 0 | 0 | 1,244 | 0 | 1,244 | |
| Share-based payment, options and shares | 0 | 0 | 8,918 | 0 | 8,918 | |
| Tax, share-based payment | 0 | 0 | 699 | 0 | 699 | |
| Purchase of treasury shares | 0 | 0 | -42,850 | 0 | -42,850 | |
| Proposed dividends to shareholders | 0 | 0 | -22,174 | 22,174 | 0 | |
| Equity at 31 December 2013 | 5,844 | -2,394 | 45,942 | 22,174 | 71,566 | |
| Equity at 1 January 2014 Comprehensive income for the year* |
5,844 | -2,394 | 45,942 | 22,174 | 71,566 | |
| Total comprehensive income for the year | 0 | 1,339 | 41,202 | 0 | 42,541 | |
| Transactions with owners | ||||||
| Cancellation of treasury shares | -269 | 0 | 269 | 0 | 0 | |
| Dividends paid to shareholders | 0 | 0 | 43 | -22,174 | -22,131 | |
| Share-based payment, options and shares | 0 | 0 | 4,986 | 0 | 4,986 | |
| Tax, share-based payment | 0 | 0 | 873 | 0 | 873 | |
| Purchase of treasury shares | 0 | 0 | -24,455 | 0 | -24,455 | |
| Proposed dividends to shareholders | 0 | 0 | -24,652 | 24,652 | 0 | |
| Equity at 31 December 2014 | 5,575 | -1,055 | 44,208 | 24,652 | 73,380 |
* Please refer to Statement of comprehensive income on page 50.
Changes to the structure of the financial statements have been implemented in 2014 with the aim of ensuring a more comprehensible report and enhance the reader's experience. The notes have been divided into sections based on the order and
item where they appear in the statements. In addition, the notes to the financial statements have been redesigned to facilitate interpretation. Finally, the Group's accounting policies that relate to the financial statements as a whole are set out in Note 1. Accounting policies which relate to a specific note or section have been included at the beginning of each section or note following definitions and policies relevant to each note.
SimCorp A/S is a public limited company based in Denmark. The annual report for the period 1 January to 31 December 2014 includes the consolidate financial statements of SimCorp A/S and its subsidiary undertakings (the Group) as well as the financial statements of the parent company.
The annual report of the parent company SimCorp A/S and the Group is presented in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and Danish disclosure requirements for the annual reports of listed companies.
On 16 February 2015 the Board of Directors and the Executive Management Board considered and approved the annual report for 2014 of SimCorp A/S. The annual report will be presented to the shareholders for approval at the annual general meeting to be held on 23 March 2015.
The financial statements are presented in EUR which is the reporting currency of the activities of the Group, rounded to the nearest EUR 1,000. The EUR is the reporting currency because most of the Group's transactions are in this currency.
The functional currency of the parent company SimCorp A/S is DKK.
The annual report has been prepared in accordance with the historical cost convention, except where IFRS explicitly requires use of other values.
The accounting policies, except as described below, have been applied consistently during the financial year and for the comparative figures. For standards implemented prospectively, the comparative figures are not restated.
The Annual Report for 2014 is presented in conformity with the new and revised IFRS/IAS standards and new IFRIC interpretations approved by the EU, which apply to financial years beginning on 1 January 2014 or later.
In addition, a number of new accounting standards and interpretations have been implemented which do not have monetary effect on the parent company and the SimCorp Group's result, assets, liabilities or equity.
The consolidated financial statements comprise the parent company SimCorp A/S and subsidiaries. Subsidiaries are entities controlled by the parent. Control is established when SimCorp A/S is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.
Companies in which the Group holds between 20% and 50% of the voting rights and/or otherwise exercises a significant, but not a controlling influence are considered associates.
The consolidated financial statements have been prepared by including the financial statements of the parent company and the subsidiaries, which have all been prepared in accordance with the Group's accounting policies. On consolidation, intra-group income and expenses, shareholdings, balances, dividends and realized and unrealized gains and losses on intra-group transactions are eliminated.
Unrealized gains and losses on transactions with associates are eliminated in proportion to the Group's shares in the associates. .
For each of the reporting entities in the Group, a functional currency is determined. The functional currency is the currency in the primary economic environment in which the individual reporting entity operates. Transactions in currencies other than the functional currency are denominated in foreign currencies.
On initial recognition, transactions denominated in foreign currencies are translated into the functional currency at the exchange rates effective at the transaction dates. The average rate of exchange for the month is used to approximate the transaction dates' exchange rates. Exchange differences arising between the exchange rates at the transaction dates and the exchange rates at the dates of actual payments are recognized in the income statement under financial income or financial expenses.
Receivables, payables and other monetary items denominated in foreign currencies are translated to the functional currency at the exchange rates effective at the balance sheet date. The differences between the exchange rates effective at the balance sheet date and the exchange rates effective at the dates when the receivables or payables arose, or the exchange rate applied in the most recent annual report, are recognized in the income statement under financial income or financial expenses.
Foreign exchange adjustments of intra-group accounts between SimCorp A/S and subsidiaries that are considered as part of the net investment in the subsidiaries concerned are recognized in the consolidated financial statements in other comprehensive income in a separate exchange adjustment under equity. Corresponding foreign exchange adjustments are recognized in the income statement in SimCorp A/S' financial statements.
On consolidation of foreign subsidiaries and associates with functional currencies differing from SimCorp A/S' reporting currency, the income statements are translated at the exchange rates effective at the transaction dates, and the balance sheets are translated at the exchange rates effective at the balance sheet date. The average exchange rate for each individual month is used as the transaction date's exchange rate. Exchange differences arising on the translation of foreign subsidiaries' opening equity at the exchange rates effective at the prior balance sheet date, and on the translation of the income statements from the exchange rates effective at the transaction dates to the exchange rates effective at the balance sheet date, are taken directly to other comprehensive income in a separate exchange adjustment under equity.
Settlement of intra-group balances considered part of the net investment are not per se considered a partial divestment of a subsidiary.
Other comprehensive income consists of income and costs not included in the income statement, including exchange rate adjustments arising from the translation of consolidated companies' financial statements into reporting currency, and actuarial gains or losses on defined benefit plans.
The cash flow statement shows the parent company's and the Group's cash flows divided into operating, investing and financing activities as well as cash and cash equivalents at the beginning and end of the year.
Cash flows from investing activities comprise receipts and payments in connection with acquisitions and disposals of companies and operations, intangible assets and property, plant and equipment as well as other non-current assets and liabilities.
Cash flows from financing activities comprise changes in share capital and related costs, purchase or sale of treasury shares and distributions of dividends to shareholders.
Cash and cash equivalents comprise cash and bank deposits.
In applying the Group's accounting policies, in addition to estimations, management makes other judgments that may impact the amounts recognized in the annual accounts.
Such judgments include, the timing of income recognition, impairment review, whether leases should be treated as operating or finance leases, if deferred tax assets and liabilities should be recognized as well as provisions.
The calculation of carrying amounts of certain assets and liabilities requires an estimate of how future events will affect the value of such assets and liabilities on the balance sheet date. Estimates of significance to the financial statements are made in relation to expensing or capitalizing development costs, recognition of, inter alia, revenue, sales value of contracts in progress relating to professional services and deferred tax.
The estimates and judgments applied are based on assumptions which management believes to be reasonable, but which are inherently uncertain and unpredictable. Such assumptions may be incomplete or inaccurate, and unexpected events or circumstances may arise. In addition, the company is subject to risks and uncertainties encountered in the ordinary course of business that may cause actual results to deviate from the estimates.
The notes to the financial statements contain information about the assumptions and the uncertainty of estimates at the balance sheet date involving the risk of changes that could lead to adjustments to the carrying amounts of assets or liabilities within the upcoming financial year.
For the SimCorp Group, the measurement of intangible assets, including goodwill, could be affected by significant changes in judgment and assumptions underlying their calculation. See note 14 for a more detailed description of impairment tests for intangible assets.
In addition to goodwill, the most significant assets acquired include customer contracts and software. As active markets for the majority of acquired assets and liabilities do not exist, management has made estimates of their fair values. Fair values were estimated as the present value of future cash flows calculated based on churn rates or other expected cash flows related to each asset. Estimates of fair value are associated with uncertainty and may be subsequently adjusted.
The fair value of customer contracts acquired in business combinations is based on an evaluation of the conditions relating to the acquired customer contract portfolio and related customer relationships. Measurement is based on a discounted cash flow model based on key assumptions about the related churn rates and profitability at the time of acquisition. In addition, management estimates Weighted Average Cost of Capital and a risk premium for the assumed risk inherent in customer contracts. See note 16 for additional information on purchase price allocation.
Risk factors specific to the SimCorp Group are described in the management report on page 22 and in the financial instruments and risks (note 29).
Financial highlights and key ratios are defined and calculated in accordance with the Danish Society of Financial Analysts' "Recommendations and Financial Ratios 2010". Earnings per share (EPS) and diluted earnings per share (EPS-D) are measured according to IAS 33.
EBIT margin (%) Operating profit / Revenue x 100 Debtor turnover ratio Revenue / Receivables at year-end
Price / Book value per share (P/BV) Price / Book Value (BVPS) Price / Diluted price earnings (P/E Diluted) Price / EPS Diluted shares Price / Cash flow (P/CF) Price / Cash flow (CFPS)
ROIC (return on invested capital) (%) Operating profit / Average operating assets x 100 Equity ratio (%) Equity at year-end / Total assets at year-end x 100 Return on equity (ROE) (%) Profit for the year / Average equity x 100
Basic earnings per share (EPS) Profit for the year / Average number of shares Diluted earnings per share (EPS-D) Profit for the year / Average number of diluted shares Cash flow per share (CFPS) Cash flow from operating activities / Average number of diluted shares Book value per share (BVPS) Equity at year-end / Average number of shares Dividend per share (DPS) Dividends paid / Number of shares at year-end Dividend payout ratio (%) Dividends paid / Profit for the year x 100 Total payout ratio (%) Dividends paid plus value of share buybacks / Profit for the year x 100
Notes to the income statement provide specifications to the Group's and parent company's profit for the year. Specifications include disclosures on revenue, segment information, cost of sales, share based remuneration, board of directors and executive management remuneration, result in investments, tax and other expenses.
Accounting policies that do not relate exclusively to a specific income statement note are set out below. Accounting policies which relate to a particular note to the income statement have been included with each individual note.
Cost of sales comprises costs incurred to achieve the year's revenue, including costs of delivering and implementing systems, training courses and
support. Cost of sales primarily comprises salaries, share-based payments, other staff-related costs, depreciation and amortization, and indirect costs, such as rent and technological infrastructure.
Research and development costs comprise salaries, share-based payments, other staff-related costs, depreciation and amortization, and other costs directly or indirectly attributable to the Group's research and development activities.
Research and development costs are expensed in the year in which they are incurred when they do not qualify for capitalization, for capitalization criteria see note 14.
Sales and distribution costs primarily comprise salaries, share-based payments and other sales staff-related costs, travel and meeting expenses, marketing expenses, depreciation and amortization, and indirect costs such as rent and technological infrastructure.
Administrative expenses comprise salaries, share-based payments and other staff costs and expenses related to management, administrative staff, office costs, depreciation, amortization and indirect costs such as rent and technological infrastructure.
Other operating income comprises income of a secondary nature relative to the activities of the Group, including gains on the sale of intangible assets and property, plant and equipment, and for the parent company, invoicing to subsidiaries of costs incurred.
REVENUE BY TYPE OF SERVICE 2
Revenue from sales of standard software licenses is recognized at the time of delivery provided the delivery of standard software does not depend on acceptance of its functionality. If there is a requirement for customer acceptance of functionality, the license revenue is recognized at the time of acceptance.
The total contract sum is allocated to the separate components of those standard software contracts which comprise several components. The individual allocations are recognized according to the principles herein described.
License revenue under fixed term license agreements and revenue from subscription agreements are recognized on a straight-line basis over the terms of the related agreements.
Professional service fees sold on Time and Material are recognized as and when the work is performed.
Revenue from fixed fee professional services projects is determined by applying the percentage-of-completion method. The percentage-of-completion method requires estimation of total revenue and the stage of completion. The assumptions, estimates, and uncertainties inherent in determining the stage of completion affect the timing and amounts of revenue recognized. If there is no sufficient basis to measure the progress of completion, or to estimate the total contract revenue, revenue
recognition is limited to the amount of contract costs incurred. The determination of whether a sufficient basis to measure the progress of completion exists is judgmental. Changes in estimates of progress towards completion and of contract revenue and contract costs are accounted for as cumulative catch-up adjustments to the reported revenue for the applicable contract.
Revenue from maintenance agreements is recognized on a straight-line basis over the contract period.
Other revenue, such as revenue from training courses and hosting activities, is recognized when the services have been delivered.
| 2013 | 2014 | 2013 | 2014 | |
|---|---|---|---|---|
| EUR '000 | EUR '000 | EUR '000 | EUR '000 | |
| 6,098 | 7,906 Licenses - new sales | 12,196 | 15,811 | |
| 16,604 | 15,974 Licenses - additional sales | 30,064 | 31,861 | |
| 11,945 | 13,944 Professional services | 76,335 | 79,800 | |
| 58,160 | 62,504 Maintenance | 104,297 | 110,431 | |
| 176 | 205 Training activities etc, | 2,237 | 3,166 | |
| 92,983 | 100,533 Total | 225,129 | 241,069 |
The SimCorp Group has no customers with revenue of more than 4% (2013: 4%) of total revenue.
The Group develops and sells standard software and related services. The operation is managed and organized in respectively a product division that is responsible for the development of the software, and in a sales organization. The sales organization is based on a geographical structure, in which the countries are grouped into six market units. The market units have been identified based on countries that share the same market conditions and cultures.
The accounting policies of the reported segments are the same as the Group's accounting policies described throughout the notes. Segment reporting shows revenue and operating profit together with total assets that can be directly related to the individual segments. Unallocated assets are headquarter assets, cash, taxes and investments in associates.
Segment reporting is prepared in accordance with the Group's internal management reporting structure for performance management and resource allocation. The segments reflect the geographical market unit structure for the sale of the SimCorp Dimension software and related services as well as the product division being responsible for the development and technical support of the SimCorp Dimension software. The SimCorp Coric segment relates to the development and sale of the SimCorp Coric software. Additionally the Group reports on corporate functions which include shared services regarding administration, marketing and internal systems, which are allocated based on an allocation key for the segments. Segment income and costs consist of transactions between the segments. Such transactions are made on market terms.
* Product Division includes all development costs for SimCorp Dimension. **From 1 March 2014 to 31 December 2014.
Unallocated profit from operations comprises the impairment of goodwill related to FIX.Net, for additional information refer to Note 14.
Refer note 33 for reconciliation to income statement.
Geographical segmentation is presented for revenue and non-current assets for the most important countries for the Group:
| GROUP | 2013 | 2013 | 2014 | 2014 |
|---|---|---|---|---|
| EUR '000 | Allocation | EUR '000 | Allocation | |
| Revenue allocation by country (significant) | ||||
| Germany | 42,338 | 19% | 44,230 | 18% |
| USA | 18,494 | 8% | 24,299 | 10% |
| Netherlands | 16,619 | 7% | 21,369 | 9% |
| Switzerland | 19,140 | 9% | 20,800 | 9% |
| Denmark | 20,334 | 9% | 20,746 | 9% |
| Norway | 14,189 | 6% | 17,439 | 7% |
| Canada | 20,231 | 9% | 14,049 | 6% |
| England | 13,095 | 6% | 12,624 | 5% |
| France | 8,413 | 4% | 12,003 | 5% |
| Sweden | 12,194 | 5% | 11,379 | 5% |
| Non-current assets allocation by country (significant) | ||||
| Denmark | 4,226 | 55% | 4,037 | 24% |
| England | 2,531 | 33% | 11,485 | 69% |
Revenue from rental of software and subscription agreements are based on agreements giving customers the right to use the SimCorp Dimension standard software and/or the SimCorp Coric standard software over a limited period of time. The term of these agreements is typically between three and five years. Customers subsequently have an option to extend the rental or subscription period.
Rental revenue is recognized straight-line over the contract period.
| 2013 | 2014 | 2013 | 2014 |
|---|---|---|---|
| EUR '000 | EUR '000 | EUR '000 | EUR '000 |
| Rental of software | |||
| 716 | 628 Future revenue within 1 year 1,432 |
3,874 | |
| 1,441 | 884 Future revenue within 2-5 years 2,881 |
6,142 | |
| 0 | 0 Future revenue after 5 years 0 |
296 | |
| 2,157 | 1,512 Total rental of software 4,313 |
10,312 |
Year 2014 includes subscriptions from SimCorp Coric.
STAFF, BOARD AND EXECUTIVE MANAGEMENT REMUNERATION
Staff expenses cover salaries, share-based payments, sales commission, holiday pay, bonuses, pensions and social costs and other benefits for all employees.
The Board of Directors is a collective body for promoting the long-term interests of the company. The Board of Directors is assisted in realizing its goals by the Executive Management Board.
Obligations related to contributions-based pension schemes are recognised in the income statement under staff costs in the period for which the related service is provided. The accounting treatment for defined benefit plans is described in note 22. The accounting policy for share-based remuneration is described in note 6.
| 2013 | 2014 | 2013 | 2014 | |
|---|---|---|---|---|
| EUR '000 | EUR '000 | EUR '000 | EUR '000 | |
| Staff costs | ||||
| 50,135 | 51,608 Wages and salaries | 105,011 | 114,011 | |
| 0 | 0 Defined contribution pension plans | 1,044 | 1,409 | |
| 0 | 0 Defined benefit pension plans | 613 | 613 | |
| 3,039 | 3,535 Share-based payments | 3,039 | 3,535 | |
| 134 | 136 Social security costs | 7,901 | 8,845 | |
| 53,308 | 55,279 Total staff cost | 117,608 | 128,413 | |
| 460 | 463 Average number of employees | 1,093 | 1,187 |
| BOARD OF DIRECTORS | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| EUR '000 | Fees for | Travel | Share-based | ||||||||
| PARENT COMPANY | Board fees | committee work | allowance | payment | Total | ||||||
| 2013 | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | 2014 | ||
| Remuneration | |||||||||||
| Jesper Brandgaard | 67 | 84 | - | - | 3 | 3 | 45 | 34 | 115 | 121 | |
| Peter Schütze | 40 | 50 | - | - | 3 | 3 | 27 | 20 | 70 | 73 | |
| Herve Couturier | 27 | 34 | - | - | 9 | 9 | 18 | 13 | 54 | 56 | |
| Simon Jeffreys | 27 | 34 | 13 | 16 | 13 | 15 | 27 | 20 | 80 | 85 | |
| Patrice McDonald | - | 34 | - | 8 | - | 20 | - | 17 | - | 79 | |
| Jacob Goltermann | 27 | 34 | - | 8 | 3 | 3 | 25 | 17 | 55 | 62 | |
| Raymond John | 27 | 34 | - | - | 3 | 3 | 20 | 13 | 50 | 50 | |
| Total remuneration to members of | |||||||||||
| the Board of Directors: | 215 | 304 | 13 | 32 | 34 | 56 | 162 | 134 | 424 | 526 |
| EUR'000 | Share-based | Performance | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| PARENT COMPANY | Salary | Other benefits | payment | related bonus | Total | ||||||
| 2013 | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | 2014 | ||
| Remuneration | |||||||||||
| Klaus Holse | 550 | 605 | 44 | 38 | 481 | 555 | 201 | 154 | 1,276 | 1,352 | |
| Georg Hetrodt | 323 | 349 | 19 | 19 | 187 | 117 | 118 | 89 | 647 | 574 | |
| Thomas Johansen | 316 | 326 | 19 | 17 | 141 | 113 | 116 | 83 | 592 | 539 | |
| Total Remuneration to members of | |||||||||||
| the Executive Management Board: | 1,189 | 1,280 | 82 | 74 | 809 | 785 | 435 | 326 | 2,515 | 2,465 |
| RESTRICTED STOCKS UNITS AWARDED TO MANAGEMENT | ||||||
|---|---|---|---|---|---|---|
| NUMBER OF SHARES 2013 |
2014 | |||||
| PARENT COMPANY Shares |
Shares | |||||
| 33,300 Total long-term program restricted stocks awarded to Executive Management Board |
24,456 | |||||
| Corporate Bonus program restricted stocks awarded to parent company management: | - | |||||
| Board of Directors* | 1,084 | |||||
| Executive Management Board | - | 6,179 | ||||
| Total Corporate Bonus program restricted stocks awarded to parent company management - |
||||||
| Employee shares acquired by parent company management: | ||||||
| Board of Directors* | 530 | - | ||||
| Executive Management Board 2,660 |
- | |||||
| Total number of employee shares acquired by management 3,190 |
||||||
| Total number of shares allotted to the Board of Directors** 5,810 |
5,835 |
* Restricted stocks units and employee shares acquired in capacity as employees of SimCorp A/S. Further details refer note 6.
** Allotted as part of the remuneration of the Board of Directors.
Remuneration to the Board of Directors is composed of a cash element and a number of SimCorp shares. The value of the shares allotted was determined immediately prior to the annual general meeting at which the shareholders approved the remuneration, and it represents one third of the total remuneration. The remuneration is paid on a quarterly basis.
The aggregate remuneration of the Executive Management Board consists of a fixed salary and a bonus component subject to the financial results achieved in a given financial year, as well as eligibility for the share-based incentive program. The bonus component will generally make up about 45% of the fixed remuneration. The value of the long-term share-based incentive program, defined as the aggregate theoretical value at the time of grant, will represent up to around 55% of the fixed salary and the value of the corporate bonus restricted stock (2013: employee shares) will make up about 6% of the fixed salary. Each year, the Board of Directors determines the fixed remuneration and the size of the performance-related bonus for the Executive Management Board and the specific targets that will trigger a bonus.
Members of the Executive Management Board can terminate their service contracts giving six months' notice. The company can terminate the service contracts giving 12 months' notice. Termination on the part of the company triggers a severance pay of 6-9 months' salary subject to the term of employment. In case of very material changes to the company's ownership, the company's term of notice to members of the Executive Management Board is prolonged for a two-year period up to 24 months.
SimCorp's Board of Directors has adopted an overall policy for remuneration and incentive programs and the policy has been approved by shareholders at the annual general meeting. The overall objective being to promote awareness of profitable growth and the Group's long-term goals. The Board of Directors wishes the company to offer share-based remuneration. The Board of Directors also believes that it is a natural decision for a company like SimCorp to offer shares to its Board members as a minor part of their overall remuneration. Shares are granted to members of the Board of Directors subject to approval at the annual general meeting.
On 3 June 2013 the trade denomination of the SimCorp shares was changed from DKK 10 to DKK 1 per share. The tables below showing stock options, employee shares and restricted stock units have been adjusted to shares of DKK 1.
In the 2014 financial year EUR 3.7m (2013: EUR 3.0m) was charged to the income statement in respect of share-based remuneration.
For equity-settled stock options, the fair value is measured at the grant date and recognized in the income statement under staff expenses over the vesting period. The counter entry is recognized directly in equity.
On initial recognition of stock options, the number of options expected to vest is estimated. Subsequently, adjustment is made only for changes in the number of employees estimated to become entitled to options. Adjustments are recognized in the income statement under staff expenses.
For restricted stock units, fair value is measured at the grant dates and recognized in the income statement as staff expenses over the vesting period. The counter entry is recognized directly in equity.
On initial recognition of restricted stock units, the number of restricted stock units expected to vest is estimated. Subsequently, adjustment is made for changes in the number of employees estimated to become entitled to restricted stock units and the numbers of the restricted units are adjusted when performance conditions are only partly met and the adjustment is recognized in the income statement as staff expenses.
When the SimCorp Group's employees are given the opportunity to acquire or subscribe for shares at a price below the market price, the discount is recognized as an expense in staff expenses. The counter entry is recognized directly in equity. The discount is calculated at the acquisition date as the difference between fair value and the acquisition price of the shares acquired or subscribed.
A total of 711,800 options of DKK 1 were granted to members of the Executive Management Board and key employees in April 2008 and an additional 8,000 options of DKK 1 were granted in July 2008 to an employee. When issued, the stock options had terms of between one and five years. The subscription price was fixed subject to the terms of the stock options at a minimum of 5, 10 or 15%, respectively, above the market price at the time of issue for options with minimum terms of 1, 2 and 3 years, respectively. 2013: EUR 12 thousand was reversed to the income statement in respect of this program in the 2014 financial year. This program was completed during 2013.
A total of 813,990 options at DKK 1 were granted to members of the Executive Management Board and the key employees in April 2009. When issued, the stock options had terms of between one and five years. The subscription price was fixed subject to the term of the stock options at a minimum of 5, 10 or 15%, respectively, above the market price at the time of issue for options with minimum terms of 1, 2 and 3 years, respectively. This program was fully charged in previous years. This program was completed during 2014 and no further stock options are outstanding.
| STOCK OPTIONS | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| PARENT COMPANY | 1 January 2013 | 31 December 2013 | 31 December 2014 | ||||||
| 2013 | 2013 | 2014 | |||||||
| Purchase price (DKK) Exercise period | Outstanding | Cancelled | Exercised | Outstanding Avg. remaining term | Exercised | Outstanding | |||
| Other employees | |||||||||
| 105.80 | Aug.09-Aug.13 | 55,240 | -1,000 | -54,240 | 0 | 0 | |||
| 110.80 | Aug.10-Aug.13 | 102,900 | -4,500 | -98,400 | 0 | 0 | |||
| 115.90 | Aug.11-Aug.13 | 206,500 | -16,500 | -190,000 | 0 | 0 | |||
| 57.40 | Aug.10-Aug.14 | 22,660 | 0 | -21,660 | 1,000 | 0.31 | -1,000 | 0 | |
| 60.10 | Aug.11-Aug.14 | 40,000 | 0 | -38,500 | 1,500 | 0.31 | -1,500 | 0 | |
| 62.90 | Aug.12-Aug.14 | 114,170 | 0 | -109,170 | 5,000 | 0.31 | -5,000 | 0 | |
| Total Stock Options | 541,470 | -22,000 | -511,970 | 7,500 | 0.31 | -7,500 | 0 |
The average market price at the time of exercise was DKK 214.42 (2013: DKK 154.73) per share.
Restricted stock units are granted annually in April to members of the Executive Management Board and key employees as part of the long-term incentive program. These restricted stock units vest three years after being granted subject to continuing employment. Furthermore, the restricted stock units are subject to conditions with respect to average annual minimum revenue growth and annual average net operating profit after tax for the three consecutive financial years including the year of grant. If the two last conditions are only partially satisfied, the undertaking with respect to the number of shares transferred after three years is reduced, and may possibly lapse completely.
In addition, restricted stock units with particular vesting conditions are occasionally granted to key personnel upon hiring as a part of a sign-on agreement, special performance incentives or similar incentives. When such particular vesting conditions apply they are specifically described below.
In April 2011, a total of 162,140 restricted stock units were granted to members of the Executive Management Board and key employees, and an additional 1,220 restricted stock units were granted in connection with the employment of a Senior Vice President in the second half of 2011. These restricted stock units vested in 2014. EUR 78 thousand (2013: EUR 330 thousand) was charged to the income statement in respect of this program in the 2014 financial year. In the 2014 financial year 101,326 shares were transferred to the Executive Management Board and key employees, who participated in the long-term incentive program in 2011 and have fulfilled the program's criteria. The number of shares was reduced by 21,3% compared to the maximum under the program.
In April 2012 a total of 154,710 restricted stock units were granted to members of the Executive Management Board and key employees. In September 2012 an additional 1,250 restricted stock units were granted in connection with the appointment of an Executive Vice President and a further 5,000 restricted stock units were granted to the CEO in January 2013. EUR 283 thousand (2013: EUR 448 thousand) was charged to the income statement in respect of this program in the 2014 financial year. The number of shares was reduced by 17.4% compared to the maximum under the program.
In addition, on 1 April 2012, 15,000 restricted stock units were granted to a senior employee in North America. Fifty percent of these restricted stock units vest after four years, and fifty percent after five years subject to continuing employment, and furthermore, the restricted stock units are subject to conditions with respect to the average annual EBIT result for the market unit for the financial years 2012-2014. The charges for this program has been reversed EUR -38 thousand (2013: EUR 7 thousand). All restricted stock units granted under this program have been cancelled.
In connection with Klaus Holse's appointment as CEO 107,220 restricted stock units were granted to him on 1 September 2012, as Klaus Holse has completed his personal investment of DKK 5m in Sim-Corp shares. Sixty percent of these restricted stock units vest after three years, further twenty percent after four years, and the remaining twenty percent after five years subject to continuing employment. EUR 388 thousand (2013: EUR 387 thousand) was charged to the income statement in respect of this program in the 2014 financial year.
In April 2013 a total of 117,950 restricted stock units were granted to members of the Executive Management Board and key employees, and additional 1,230 restricted stock units were granted in connection with the appointment of a Senior Vice President in July 2013. Furthermore 610 restricted stock units were granted to a newly appointed Senior Vice President in October 2013. EUR 477 thousand (2013: EUR 466 thousand) was charged to the income statement in respect of this program in the 2014 financial year including provisions related to staff redundancy. The number of shares is currently reduced by 27,6% compared to the maximum under the program.
In April 2014 a total of 83,325 restricted stock units were granted to members of the Executive Management Board and key employees. EUR 665 thousand was charged to the income statement in respect of this program in the 2014 financial year including provisions related to staff redundancy. The number of shares is currently reduced by 17,3% compared to the maximum under the program.
Additional 9,170 restricted stock units were granted in connection with the appointment of a senior management employee in the UK. These vest after three years, subject to continuing employment and are subject to conditions with respect to average annual revenue growth for the financial years 2014 to 2016. If the conditions are only partially satisfied, the number of shares transferred after three years will be reduced, and may possibly lapse completely. EUR 35 thousand was charged to the income statement in respect of this program in the 2014 financial year.
Furthermore, in connection with the acquisition of Equipos Ltd. (SimCorp Coric Ltd.) 8,431 restricted stock units have been granted to management and key employees of SimCorp Coric Ltd. These restricted stock units will vest after three years subject to continuing employment. At 31 December 2014 7,166 remained outstanding. EUR 50 thousand was charged to the income statement in respect of this program in the 2014 financial year.
Finally, in connection with the appointment of new head of North America the Company has granted 9.493 restricted stock units equivalent to EUR 200 thousand. These will vest after three years, subject to continuing employment as part of the sign-on agreement. Additionally the Company has granted 15,000 restricted stock units, which will vest end of
February 2018, subject to continuing employment. Furthermore, these restricted stock units are subject to conditions with respect to annual revenue growth in North America for the financial years 2015 to 2017. If the conditions are only partially satisfied, the number of shares transferred after three years will be reduced, and may possibly lapse completely. EUR 48 thousand was charged to the income statement in respect of these programs in the 2014 financial year.
As part of the annual corporate bonus program the employees have had the option to use or waive their corporate bonus and instead select to purchase employee shares (discontinued after 2012) with a discount of 60% or to receive restricted stock units with a discount of 67%. Based on the waived bonus amount the company grants restricted stock units to employees of the parent company and its foreign subsidiaries. The restricted stock units vest after 3 years subject to continuing employment.
On 6 March 2013 the company sold 63,350 treasury shares to 279 employees of the parent company and its foreign subsidiaries as part of its corporate bonus program. The price was DKK 58.60 per share, corresponding to 40% of the average market price from 28 February to 4 March 2013. EUR 89 thousand was charged to the income statement in connection with the program in the 2013 financial year. The employee shares are held in restricted accounts until 15 March 2016. Employees cannot sell or otherwise dispose of the shares during the period in which they are subject to selling restrictions.
On 20 March 2012 the company granted 35,700 restricted stock units in connection with the 2011 corporate bonus program. EUR 59 thousand (2013: EUR 62 thousand) was charged to the income statement in respect of this program in the 2014 financial year.
On 6 March 2013 the company granted 14,350 restricted stock units as part of its 2012 corporate bonus program. EUR 42 thousand (2013:83 thousand) was charged to the income statement in respect of this program in the 2014 financial year.
On 1 April 2014 the company granted 144,718 restricted stock units in connection with the 2013 corporate bonus program. EUR 851 thousand was charged to the income statement in respect of this program in the 2014 financial year.
In March 2015 the company will grant restricted stock units as part of its corporate bonus program for 2014. EUR 631 thousand (2013: 905 thousand) was charged to the income statement in respect of this program in the 2014 financial year.
| 2013 | FairValue | 1 January | Vested | Perfor | 31 December | |||||
|---|---|---|---|---|---|---|---|---|---|---|
| Grant | EUR | Out | Granted | and | mance | Avg. remain | ||||
| Type | Year Vesting period | million** | standing | 2013 | transferred | Cancelled | Adjustment Outstanding | ing term | ||
| Board of Directors * | ||||||||||
| Long-term incentive program | 2010 | Apr-13 | 700 | 0 | -700 | 0 | 0 | 0 | ||
| Long-term incentive program | 2011 | Apr-14 | 750 | 0 | 0 | 0 | -160 | 590 | 0.25 | |
| Executive Management Board | ||||||||||
| Long-term incentive program | 2010 | Apr-13 | 15,080 | 0 | -12,360 | 0 | -2,720 | 0 | ||
| Long-term incentive program | 2011 | Apr-14 | 30,060 | 0 | 0 | 0 | -6,403 | 23,657 | 0.25 | |
| Long-term incentive program | 2012 | Apr-15 | 34,600 | 0 | 0 | 0 | 0 | 34,600 | 1.25 | |
| Long-term incentive program | 2013 | Feb-16 | 0 | 33,300 | 0 | 0 | 0 | 33,300 | 2.17 | |
| Corporate Bonus 2011 | 2012 | Mar-15 | 7,380 | 0 | 0 | -4,570 | - | 2,810 | 1.25 | |
| CEO - Klaus Holse | 2012 | Sep-15/16/17 | 107,220 | 0 | 0 | 0 | - | 107,220 | 2.27 | |
| Other employees | ||||||||||
| Long-term incentive program | 2010 | Apr-13 | 87,740 | 0 | -83,550 | -4,190 | 0 | 0 | ||
| Long-term incentive program | 2011 | Apr-14 | 102,490 | 0 | 0 | -4,550 | -20,861 | 77,079 | 0.25 | |
| Long-term incentive program | 2012 | Apr-15 | 99,340 | 0 | 0 | -4,460 | 0 | 94,880 | 1.25 | |
| Long-term incentive program | 2013 | Feb-16 | 0 | 86,490 | 0 | -2,900 | 0 | 83,590 | 2.17 | |
| Corporate Bonus 2011 | 2012 | Mar-15 | 28,320 | 0 | 0 | -310 | - | 28,010 | 1.25 | |
| Corporate Bonus 2012 | 2013 | Mar-16 | 0 | 14,350 | 0 | 0 | - | 14,350 | 2.25 | |
| Senior Employee North America | 2012 | Apr-16/17 | 15,000 | 0 | 0 | 0 | 0 | 15,000 | 2.75 | |
| Total | ||||||||||
| Long-term incentive program | 2010 | Apr-13 | 2.0 | 100,800 | 0 | -96,610 | -4,190 | 0 | 0 | |
| Long-term incentive program | 2011 | Apr-14 | 1.9 | 133,300 | 0 | 0 | -4,550 | -27,424 | 101,326 | 0.25 |
| Long-term incentive program | 2012 | Apr-15 | 2.1 | 133,940 | 0 | 0 | -4,460 | 0 | 129,480 | 1.25 |
| Long-term incentive program | 2013 | Feb-16 | 2.5 | 0 | 119,790 | 0 | -2,900 | 0 | 116,890 | 2.17 |
| Corporate Bonus 2011 | 2012 | Mar-15 | 0.3 | 35,700 | 0 | 0 | -4,880 | - | 30,820 | 1.25 |
| Corporate Bonus 2012 | 2013 | Mar-16 | 0.3 | 0 | 14,350 | 0 | 0 | - | 14,350 | 2.25 |
| Senior Employee North America | 2012 | Apr-16/17 | 0.2 | 15,000 | 0 | 0 | 0 | 0 | 15,000 | 2.75 |
| CEO - Klaus Holse | 2012 | Sep-15/16/17 | 1.4 | 107,220 | 0 | 0 | 0 | - | 107,220 | 2.27 |
| Total Restricted Stock Units | 525,960 | 134,140 | -96,610 | -20,980 | -27,424 | 515,086 | 1.55 |
* Restricted stock units acquired in capacity as employees of SimCorp A/S
** At time of grant.
| RESTRICTED STOCK UNITS 2014 |
||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Type | Grant | Year Vesting period | Fair Value EUR million** |
1 January Out standing |
Granted 2014 |
Vested and transferred |
Cancelled | Performance | 31 December Adjustment Outstanding |
Avg, remain ing term |
| Board of Directors * | ||||||||||
| Long-term incentive program | 2011 | Apr-14 | 590 | 0 | -590 | 0 | 0 | 0 | ||
| Corporate bonus 2013 | 2014 | Mar-15/16/17 | 0 | 1,084 | 0 | 0 | - | 1,084 | 2.25 | |
| Executive Management Board | ||||||||||
| Long-term incentive program | 2011 | Apr-14 | 23,657 | 0 | -23,657 | 0 | 0 | 0 | ||
| Long-term incentive program | 2012 | Apr-15 | 34,600 | 0 | 0 | 0 | -6,020 | 28,580 | 0.25 | |
| Long-term incentive program | 2013 | Feb-16 | 33,300 | 0 | 0 | 0 | -9,191 | 24,109 | 1.17 | |
| Long-term incentive program | 2014 | Feb-17 | 0 | 24,456 | 0 | 0 | -4,231 | 20,225 | 2.17 | |
| Corporate bonus 2011 | 2012 | Mar-15 | 2,810 | 0 | 0 | 0 | - | 2,810 | 0.25 | |
| Corporate bonus 2013 | 2014 | Mar-15/16/17 | 0 | 6,179 | 0 | 0 | - | 6,179 | 1.25 | |
| CEO - Klaus Holse | 2012 | Sep-15/16/17 | 107,220 | 0 | 0 | 0 | - | 107,220 | 1.35 | |
| Other employees | ||||||||||
| Long-term incentive program | 2011 | Apr-14 | 77,079 | 0 | -77,079 | 0 | 0 | 0 | ||
| Long-term incentive program | 2012 | Apr-15 | 94,880 | 0 | 0 | -710 | -16,386 | 77,784 | 0.25 | |
| Long-term incentive program | 2013 | Feb-16 | 83,590 | 0 | 0 | -450 | -22,947 | 60,193 | 1.17 | |
| Long-term incentive program | 2014 | Feb-17 | 0 | 58,869 | 0 | -1,565 | -9,914 | 47,390 | 2.17 | |
| Corporate bonus 2011 | 2012 | Mar-15 | 28,010 | 0 | 0 | 0 | - | 28,010 | 0.25 | |
| Corporate bonus 2012 | 2013 | Mar-16 | 14,350 | 0 | 0 | 0 | - | 14,350 | 1.25 | |
| Corporate bonus 2013 | 2014 | Mar-15/16/17 | 0 | 137,455 | 0 | -5,160 | - | 132,295 | 1.25 | |
| Senior Employee North America | 2012 | Apr-16/17 | 15,000 | 0 | 0 | 0 | -15,000 | 0 | 0 | |
| Senior Employee United Kingdom | 2014 | Mar-17 | 0 | 9,170 | 0 | 0 | 0 | 9,170 | 2.25 | |
| Key Employees SimCorp Coric | 2014 | Mar-17 | 0 | 8,431 | 0 | -1,265 | - | 7,166 | 2.25 | |
| Senior Empl. North America, sign on | 2014 | Sep-17 | 0 | 9,493 | 0 | 0 | - | 9,493 | 2.75 | |
| Senior Empl. North America | 2014 | Feb-18 | 0 | 15,000 | 0 | 0 | 0 | 15,000 | 3.17 | |
| Total | ||||||||||
| Long-term incentive program | 2011 | Apr-14 | 1.9 | 101,326 | 0 | -101,326 | 0 | 0 | 0 | - |
| Long-term incentive program | 2012 | Apr-15 | 2.1 | 129,480 | 0 | 0 | -710 | -22,406 | 106,364 | 0.25 |
| Long-term incentive program | 2013 | Feb-16 | 2.5 | 116,890 | 0 | 0 | -450 | -32,137 | 84,303 | 1.17 |
| Long-term incentive program | 2014 | Feb-17 | 2.4 | 0 | 83,325 | 0 | -1,565 | -14,144 | 67,616 | 2.17 |
| Corporate bonus 2011 | 2012 | Mar-15 | 0.3 | 30,820 | 0 | 0 | 0 | - | 30,820 | 0.25 |
| Corporate bonus 2012 | 2013 | Mar-16 | 0.3 | 14,350 | 0 | 0 | 0 | - | 14,350 | 1.25 |
| Corporate bonus 2013 | 2014 | Mar-15/16/17 | 4.2 | 0 | 144,718 | 0 | -5,160 | - | 139,558 | 1.25 |
| Senior Employee North America | 2012 | Apr-16/17 | 0.2 | 15,000 | 0 | 0 | 0 | -15,000 | 0 | 0 |
| CEO - Klaus Holse | 2012 | Sep-15/16/17 | 1.4 | 107,220 | 0 | 0 | 0 | - | 107,220 | 1.35 |
| Senior Employee United Kingdom | 2014 | Mar-17 | 0.3 | 0 | 9,170 | 0 | 0 | 0 | 9,170 | 2.25 |
| Key Employees SimCorp Coric | 2014 | Mar-17 | 0.2 | 0 | 8,431 | 0 | -1,265 | - | 7,166 | 2.25 |
| Senior Empl. North America, sign on | 2014 | Sep-17 | 0.2 | 0 | 9,493 | 0 | 0 | - | 9,493 | 2.75 |
| Senior Empl. North America | 2014 | Feb-18 | 0.3 | 0 | 15,000 | 0 | 0 | 0 | 15,000 | 3.17 |
| Total Restricted Stock Units | 515,086 | 270,137 | -101,326 | -9,150 | -83,688 | 591,059 | 1.23 |
* Restricted stock units acquired in capacity as employees of SimCorp A/S
** At time of grant.
In 2014 the company allotted 5.835 (2013: 5.810) treasury shares to members of SimCorp's Board of Directors. In the financial year 1 January to 31 December 2014 EUR 134 thousand (2013: EUR 160 thousand) was charged to the income statement in respect of this program.
| IMPAIRMENT, AMORTIZATION AND DEPRECIATION | |
|---|---|
| Accounting Policy | |
| Amortization is provided on a straight-line basis over the estimated useful | |
| lives of the assets, which are as follows: | |
| Software up to 10 years | |
| Customer contracts up to 20 years |
Property, plant and equipment are depreciated on a straight-line basis over the estimated useful lives of the assets, which are as follows:
Leasehold improvements over the lease term up to 10 years
Technical equipment up to 3 years Other fixtures and fittings, tools and equipment up to 5 years
The basis of depreciation is calculated with due consideration to scrap value and any prior impairment write down. The estimated useful life and scrap value is determined at the date of acquisition and reassessed annually. Where the scrap value exceeds the carrying amount of the asset, the asset ceases to be depreciated. Any change in depreciation period or scrap value is recognized as a change in accounting estimate.
Impairment, depreciation and amortization are recognized in the income statement as production costs, research and development costs, sales and distribution costs or administrative expenses.
| 2013 | 2014 | 2013 | 2014 | |
|---|---|---|---|---|
| EUR '000 | EUR '000 | EUR '000 | EUR '000 | |
| 0 | 0 Impairment, goodwill | 0 | 662 | |
| 413 | 398 Amortization and depreciation, cost of sales | 669 | 847 | |
| 1.215 | 1,094 Amortization and depreciation, research and development costs | 1,330 | 1,354 | |
| 132 | 131 Amortization and depreciation, sales and distribution costs | 278 | 285 | |
| 524 | 528 Amortization and depreciation, administrative expenses | 574 | 632 | |
| 2.284 | 2,151 Total impairment, amortization and depreciation | 2.851 | 3,780 | |
| Of which intangible assets: | ||||
| 0 | 0 Impairment, cost of sales | 0 | 662 | |
| 52 | 76 Amortization, cost of sales | 52 | 76 | |
| 157 | 149 Amortization, research and development costs | 157 | 149 | |
| 17 | 18 Amortization, sales and distribution costs | 19 | 19 | |
| 66 | 72 Amortization, administrative expenses | 84 | 552 | |
| 292 | 315 Total intangible assets | 312 | 1,458 |
For additional information on impairment please refer to note 14.
AUDITORS' REMUNERATION
| PARENT COMPANY | GROUP | ||
|---|---|---|---|
| 2013 | 2014 | 2013 | 2014 |
| EUR '000 | EUR '000 | EUR '000 | EUR '000 |
| Audit fees | |||
| - | 78 PricewaterhouseCoopers - |
195 | |
| 138 | - KPMG 355 |
- | |
| 138 | 78 Total audit fees 355 |
195 | |
| Other service with assurance fees | |||
| 0 | 0 KPMG 4 |
0 | |
| 0 | 0 Total other service with assurance fees 4 |
0 | |
| Tax and VAT advice fees | |||
| 0 | 175 PricewaterhouseCoopers 0 |
267 | |
| 7 | 0 KPMG 48 |
0 | |
| 7 | 175 Total Tax and VAT advice fees 48 |
267 | |
| Other service fees | |||
| 0 | 12 PricewaterhouseCoopers 0 |
106 | |
| 2 | 0 KPMG 79 |
0 | |
| 2 | 12 Total other service fees 79 |
106 |
After a tender process for audit services in October 2013, SimCorp has, at the Annual General Meeting, selected PricewaterhouseCoopers as its auditors for 2014.
Audit fees include the audit of the consolidated and local financial statements.
Tax fees primarily relate to assistance with transfer pricing audits in Denmark and Canada and fees related to preparation of Advanced Pricing Agreements with USA and Germany.
Note
SHARE OF PROFIT AFTER TAX IN ASSOCIATES 9
The Group's proportionate shares of the profit or loss of associates after tax and elimination of the proportionate shares of intra-group gains or losses are recognized in the consolidated income statement.
The share of profit after tax in associates was in 2014 EUR 50.000 (2013: EUR -111.000)
FINANCIAL INCOME 10
Financial income include interest income, realized and unrealized exchange gains on foreign currency and refunds under the Danish tax prepayment scheme. Dividends on investments in subsidiaries and associates are recognized in the parent company's income statement in the financial year in which the dividend is declared.
| PARENT COMPANY | GROUP | ||
|---|---|---|---|
| 2013 | 2014 | 2013 | 2014 |
| EUR '000 | EUR '000 | EUR '000 | EUR '000 |
| 25,709 | 30,016 Dividend from subsidiaries - |
- | |
| 20 | 20 Dividend from associates 20 |
20 | |
| 0 | 0 Gain, share in associates - |
651 | |
| 153 | 96 Interest income, subsidiaries - |
- | |
| 226 | 88 Interest income, cash etc, 349 |
160 | |
| 7 | 0 Interest income, associates 7 |
0 | |
| 676 | 0 Foreign exchange gains 676 |
0 | |
| 1,007 | 621 Foreign exchange adjustments 1,323 |
988 | |
| 27,798 | 30,841 Total financial income 2,375 |
1,819 |
FINANCIAL EXPENSES
Financial expenses include interest expenses, realized and unrealized exchange losses on foreign currency, amortization of financial assets and liabilities as well as surcharges under the Danish tax prepayment scheme.
| 2013 | 2014 | 2013 | 2014 | |
|---|---|---|---|---|
| EUR '000 | EUR '000 | EUR '000 | EUR '000 | |
| 238 | 174 Interest expenses, subsidiaries | - | - | |
| -32 | 30 Interest expenses, financial assets carried at amortized cost | -16 | 44 | |
| 0 | 13 Interest expenses, deferred payment acquisition | 0 | 13 | |
| 0 | 0 Interest expenses, pension | 25 | 36 | |
| 286 | 425 Other financial expenses | 449 | 615 | |
| 1,659 | 615 Foreign exchange adjustments 2,036 |
908 | ||
| 2,151 | 1,257 Total financial expenses 2,494 |
1,616 |
Interest expense, financial assets carried at amortized cost for 2013 is negative due to a change in the estimated costs of restoring leasehold premises.
12
TAX
The tax charge on taxable income for the year is recognized in the income statement, the year's change in deferred tax and any changes in prior-year taxable income are recognized in profit for the year, in other comprehensive income or directly in equity for any part relating to amounts recognized directly in equity.
The tax deduction on share-based remuneration for the year is recognized in taxable income in the income statement. If the total tax deduction exceed the total expenses then tax for the excess is deducted directly in equity.
| 2013 | 2014 | 2013 | 2014 |
|---|---|---|---|
| EUR '000 | EUR '000 | EUR '000 | EUR '000 |
| Tax for the period: | |||
| 4,258 | 6,731 Tax on profit 14,670 |
15,933 | |
| 0 | 0 Tax on total comprehensive income 127 |
139 | |
| 4,258 | 6,731 Total tax 14,797 |
16,072 | |
| Tax on profit for the year breaks down as follows: | |||
| 3,928 | 5,963 Current tax 14,722 |
15,651 | |
| -101 | 753 Deferred tax -553 |
364 | |
| 219 | -1 Prior-year adjustment 271 |
-138 | |
| 212 | 16 Adjustment of tax rate 230 |
56 | |
| 4,258 | 6,731 Total tax on profit for the year 14,670 |
15,933 | |
| 2,404 | 5,350 Tax paid during the year 14,388 |
15,018 | |
| Tax on profit for the year breaks down as follows: | |||
| 10,450 | 12,963 Tax calculated on the year's pre-tax profit, 24.5% 13,501 |
14,091 | |
| - | - Difference in tax in subsidiaries relative to 24.5% 757 |
538 | |
| 212 | 16 Change in tax rate 230 |
56 | |
| -6,430 | -7,375 Dividend and value adjustment, subsidiaries - |
- | |
| Tax effect: | |||
| -898 | -515 Non-taxable income -1,061 |
-699 | |
| 533 | 590 Non-deductible expenses 799 |
1,032 | |
| 391 | 1,052 Other, including prior-year adjustments 444 |
915 | |
| 4,258 | 6,731 Total tax on profit for the year 14,670 |
15,933 | |
| 10.2% | 12.7% Effective tax rate 27.2% |
27.7% |
EARNINGS PER SHARE 13
Earnings per share (EPS) and diluted earnings per share (EPS-D) are measured according to IAS 33.
| ___ | $\sim$ | |
|---|---|---|
| GROUP | 2013 | 2014 |
|---|---|---|
| Profit for the year (EUR´000) | 39,336 | 41,583 |
| Average number of shares | 44,058,904 | 42,404,110 |
| Average number of treasury shares | -1,920,251 | -1,457,619 |
| Average number of shares in circulation | 42,138,653 | 40,946,491 |
| Average dilutive impact of outstanding stock options | 4,744 | - |
| Average dilutive impact of outstanding restricted stock units | 516,428 | 598,555 |
| Average number of diluted shares in circulation | 42,659,825 | 41,545,046 |
| Basic earnings per share - EPS (EUR) | 0.93 | 1.02 |
The dilutive effect of 46.282 restricted stock units (2013: 34,840 restricted stock units), was not included as the conditions stipulated in note 6 are only expected to be partly met. They could potentially dilute earnings per share in the future. See also the Management report concerning share-based remuneration on pages 42-45.
On initial recognition, goodwill is recognized in the balance sheet at cost as described in 'Business combinations' in note 16 . Subsequently, goodwill is measured at cost less accumulated impairment. Goodwill is not amortized.
The carrying amount of goodwill is tested for impairment at least annually. Any impairment losses are recognized directly in profit for the year and are not subsequently reversed.
Intangible assets with limited economic lives are measured at cost less accumulated amortization and impairment losses. Intangible assets include proprietary and acquired software. Amortization is provided on a straight-line basis over the estimated useful lives of the assets.
Costs of development projects for software for resale are recognized as intangible assets where they are clearly defined and identifiable, where there are sufficient resources to implement the projects, and where it is certain that identifiable future income or cost reductions will cover the development and future operating costs.
Capitalized development costs comprise salaries plus overheads. Overheads comprise staff costs, rent, IT and communications.
Development costs comprise costs attributable to the Group's development functions, including salaries, and other staff costs, amortization and other indirect costs. To the extent that the development costs are not capitalized, they are recognized as research and development costs in the income statement.
Software acquired by the Group that has finite useful life is measured at cost less accumulated amortization and accumulated impairment losses.
Acquisitions related customer contracts are initially recognized at fair value at the acquisition date and subsequently carried at cost less accumulated amortization and any accumulated impairment losses. The churn rate is calculated on a contract by contract basis and has averaged around 5% on renewal. The value of customer contracts is amortized on a straight line basis, e.g. based on the estimated duration of the acquired contract or other relevant period if deemed appropriate.
The carrying values of other intangible assets are reviewed annually for impairment to assess if there is an indication of impairment beyond what is expressed through normal amortization. If the carrying amount of a non-current asset exceeds its recoverable amount, the carrying amount of the asset is written down to the recoverable amount.
Property, plant and equipment are measured at historic cost less accumulated depreciation and accumulated impairment.
For additional information on amortization and depreciation refer to note 7.
| INTANGIBLE ASSETS AND PROPERTY, PLANT AND EQUIPMENT EUR '000 PARENT COMPANY |
Software | Intangible total |
Leasehold improvement |
Technical equipment |
Equipment, fixtures and fittings |
Property, plant and equipment total |
|---|---|---|---|---|---|---|
| Cost at 1 January 2013 | 6,851 | 6,851 | 3,796 | 6,341 | 3,317 | 13,454 |
| Foreign exchange adjustment | 0 | 0 | 1 | 0 | 1 | 2 |
| Additions | 76 | 76 | -117 | 2,020 | 0 | 1,903 |
| Disposals | -104 | -104 | 0 | -1,113 | -6 | -1,119 |
| Cost at 31 December 2013 | 6,823 | 6,823 | 3,680 | 7,248 | 3,312 | 14,240 |
| Depreciation at 1 January 2013 | 6,324 | 6,324 | 1,755 | 4,948 | 2,747 | 9,450 |
| Foreign exchange adjustment | -1 | -1 | 0 | 0 | 2 | 2 |
| Depreciation | 292 | 292 | 283 | 1,159 | 550 | 1,992 |
| Disposals | -104 | -104 | 0 | -1,113 | -5 | -1,118 |
| Depreciation at 31 December 2013 | 6,511 | 6,511 | 2,038 | 4,994 | 3,294 | 10,326 |
| Carrying amount at 31 December 2013 | 312 | 312 | 1,642 | 2,254 | 18 | 3,914 |
| Cost at 1 January 2014 | 6,823 | 6,823 | 3,680 | 7,248 | 3,312 | 14,240 |
| Foreign exchange adjustment | 15 | 15 | 8 | 16 | 7 | 31 |
| Additions | 377 | 377 | 11 | 1,578 | 0 | 1,589 |
| Disposals | -26 | -26 | 0 | -2,372 | 0 | -2,372 |
| Cost at 31 December 2014 | 7,189 | 7,189 | 3,699 | 6,470 | 3,319 | 13,488 |
| Depreciation at 1 January 2014 | 6,511 | 6,511 | 2,038 | 4,994 | 3,294 | 10,326 |
| Foreign exchange adjustment | 15 | 15 | 5 | 13 | 8 | 26 |
| Depreciation | 315 | 315 | 443 | 1,382 | 11 | 1,836 |
| Disposals | -26 | -26 | 0 | -2,363 | 0 | -2,363 |
| Depreciation at 31 December 2014 | 6,815 | 6,815 | 2,486 | 4,026 | 3,313 | 9,825 |
| Carrying amount at 31 December 2014 | 374 | 374 | 1,213 | 2,444 | 6 | 3,663 |
| Depreciation period | Up to 10 years |
Up to 10 years |
3 years | 5 years |
| Equipment, | Property, plant | |||||||
|---|---|---|---|---|---|---|---|---|
| EUR '000 | Customer | Intangible | Leasehold | Technical | fixtures and | and equip | ||
| GROUP | Goodwill | Software | Contracts | total | improvement | equipment | fittings | ment total |
| Cost at 1 January 2013 | 875 | 6,337 | 0 | 7,212 | 6,571 | 7,168 | 5,037 | 18,776 |
| Foreign exchange adjustment | -83 | -3 | 0 | -86 | -128 | -58 | -64 | -250 |
| Additions | 0 | 76 | 0 | 76 | 13 | 2,166 | 35 | 2,214 |
| Disposals | 0 | -104 | 0 | -104 | -112 | -1,179 | -491 | -1,782 |
| Cost at 31 December 2013 | 792 | 6,306 | 0 | 7,098 | 6,344 | 8,097 | 4,517 | 18,958 |
| Amortization/depreciation at 1 January 2013 |
0 | 5,714 | 0 | 5,714 | 3,854 | 5,508 | 4,201 | 13,563 |
| Foreign exchange adjustment | 0 | -2 | 0 | -2 | -126 | -40 | -57 | -223 |
| Amortization/depreciation | 0 | 312 | 0 | 312 | 504 | 1,356 | 679 | 2,539 |
| Disposals | 0 | -104 | 0 | -104 | -112 | -1,158 | -490 | -1,760 |
| Amortization/depreciation at 31 December 2013 |
0 | 5,920 | 0 | 5,920 | 4,120 | 5,666 | 4,333 | 14,119 |
| Carrying amount at 31 December 2013 |
792 | 386 | 0 | 1,178 | 2,224 | 2,431 | 184 | 4,839 |
| Cost at 1 January 2014 | 792 | 6,306 | 0 | 7,098 | 6,344 | 8,097 | 4,517 | 18,958 |
| Foreign exchange adjustment | 276 | 232 | 198 | 706 | 78 | -40 | -89 | -51 |
| Additions | 0 | 377 | 0 | 377 | 189 | 1,721 | 144 | 2,054 |
| Addition on acquisition of subsidiaries | 3,925 | 3,594 | 3,377 | 10,896 | 17 | 139 | 7 | 163 |
| Disposals | 0 | -26 | 0 | -26 | 0 | -2,383 | -128 | -2,511 |
| Cost at 31 December 2014 | 4,993 | 10,483 | 3,575 | 19,051 | 6,628 | 7,534 | 4,451 | 18,613 |
| Amortization/depreciation at 1 January 2014 |
0 | 5,920 | 0 | 5,920 | 4,120 | 5,666 | 4,333 | 14,119 |
| Foreign exchange adjustment | 0 | 22 | 0 | 22 | 65 | 15 | -66 | 14 |
| Amortization/depreciation | 0 | 647 | 149 | 796 | 722 | 1,505 | 95 | 2,322 |
| Impairment | 662 | 0 | 0 | 662 | 0 | 0 | 0 | 0 |
| Disposals | 0 | -26 | 0 | -26 | 0 | -2,374 | -103 | -2,477 |
| Amortization/depreciation and impairment at 31 December 2014 |
662 | 6,563 | 149 | 7,374 | 4,907 | 4,812 | 4,259 | 13,978 |
| Carrying amount at 31 December 2014 |
4,331 | 3,920 | 3,426 | 11,677 | 1,721 | 2,722 | 192 | 4,635 |
| Amortization/depreciation period | Up to 10 years |
Up to 20 years |
Up to 10 years |
3 years | 5 years |
Negative additions in 2013 on leasehold improvements for parent company is a changed estimate of costs to restore premises when lease agreements expire.
Significant estimates for intangible assets and for property, plant and equipment have not been changed.
All intangible assets apart from goodwill are considered to have limited useful economic lives.
Determination of the useful life of customer contracts at up to 20 years and software at up to 10 years is based on estimates regarding the period over which such assets are expected to produce economic benefits to the Group.
The additions in 2014 relate to the acquisition of Equipos Ltd. (now SimCorp Coric Ltd.). Impairment of goodwill relates to the FIX.Net software that SimCorp acquired in 2005.
The additions in 2014 mainly relate to the acquisition of Equipos Ltd. (now SimCorp Coric Ltd.) and the additions in 2013 are primarily related to purchase for use in operation.
The additions in 2014 relate to the acquisition of Equipos Ltd. (now SimCorp Coric Ltd.)
If there is indication of impairment the recoverable amount of intangible assets is determined. The recoverable amount is the value in use calculated as the present value of expected future cash flows based on the companies' plans and forecasts from 2015 to 2019 (5 years). The expected revenue and cost performance for the future related to SimCorp Dimension for SimCorp Asia Pty. Ltd. and Coric for SimCorp Coric Ltd. were assessed in order to verify if sufficient to offset the carrying amount of goodwill as at 31 December 2014. No indication of impairment was perceived in relation to the goodwill for those cash generating units.
The cash generating unit FIX.Net is part of SimCorp Ltd. and its assets are not segment allocated. The impairment test for goodwill as per December 31 2014 resulted in the recognition of an impairment loss of EUR 662 thousand in relation to goodwill. No impairment loss had previously been recognized for this cash generating unit. The impairment loss was attributable to updated assumptions in the business plan which relate to future income from the FIX.Net software. Following the recognition of the impairment, the carrying amount of FIX.Net goodwill is EUR 0.
No indication of impairment beyond what is expressed through normal amortization has been perceived in relation to Software and Customer contracts.
A sensitivity analysis has been made to identify the highest discount rate which can be applied without resulting in impairment of goodwill.
The carrying amount of intangibles, the key assumptions used in the impairment testing and sensitivity analysis result as per 31 December are presented below.
| EUR '000 GROUP |
Goodwill | Software | Customer Contracts |
Total Intangibles |
Discount rate after tax* |
Annual average growth |
Maximum discount rate |
||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | ||||
| SimCorp Coric Ltd | 4,155 | 3,488 | 3,426 | 11,069 | - | 7.0% | - | 5% | - | 12% | - |
| SimCorp A/S | 0 | 374 | 0 | 374 | 312 | n/a | n/a | n/a | n/a | n/a | n/a |
| SimCorp Ltd. | 0 | 58 | 0 | 58 | 698 | 7.0% | 7.5% | neg. | 5% | 7% | 12.5% |
| SimCorp Asia Pty Ltd | 176 | 0 | 0 | 176 | 168 | 7.0% | 7.5% | 5% | 5% | 12% | 12.5% |
| Total carrying amount | 4,331 | 3,920 | 3,426 | 11,677 | 1,178 |
*The discount rate after tax is equivalent to a discount rate before tax of 9.1% (2013: 9.9%)
The estimated growth rate in revenue during the forecast period is based on the expectation that many more SimCorp Dimension clients as well as new clients will adopt the Coric reporting functionality under SimCorp's full ownership.
The operating margin in the forecast period and the terminal period are estimated based on historical levels for the Group taking into account expected effects of efficiency initiatives implemented after acquisition.
The discount rate used in determining the value in use is based on the weighted average cost of capital (WACC) formula. The WACC is determined based on a risk free rate of 3.5% (2013: 4%) and a risk premium of 3.5% (2013: 3.5%) assuming a Beta of 1 (2013: 1).
The sensitivity analyses show that discount rates can be increased by up to 5% (2013: 5%), without resulting in impairment of goodwill.
Investments in associates in the consolidated financial statements
Investments in associates are recognized according to the equity method and measured in the balance sheet at the proportionate share of the associates' net asset values calculated in accordance with the Group's accounting policies less or plus the proportionate share of any unrealized intra-group gains and losses and plus the carrying amount of goodwill.
Associates with a negative equity value are measured at nil. A provision is made if SimCorp A/S has a legal obligation to cover the negative balance of any associate.
Investments in subsidiaries and associates in the parent company's financial statements
Investments in subsidiaries and associates are measured at cost in the parent company's financial statements. Where the recoverable amount is lower than cost, the investment is written down to the lower value.
| 2013 | 2014 | 2013 | 2014 |
|---|---|---|---|
| EUR '000 | EUR '000 | EUR '000 | EUR '000 |
| Investment | |||
| 855 | 855 Cost at 1 January 855 |
855 | |
| 0 | -831 Disposals 0 |
-831 | |
| 855 | 24 Cost at 31 December 855 |
24 | |
| 0 | 0 Adjustments at 1 January 509 |
366 | |
| 0 | 0 Foreign exchange adjustment -32 |
26 | |
| 0 | 0 Share of profit for the year -111 |
50 | |
| 0 | 0 Disposals and other adjustments 0 |
-128 | |
| 0 | 0 Adjustments at 31 December 366 |
314 | |
| 855 | 24 Carrying amount at 31 December 1.221 |
338 | |
| Receivables from associates | |||
| 0 | 422 Cost at 1 January 0 |
422 | |
| 422 | 0 Additions 422 |
0 | |
| 0 | -422 Disposals 0 |
-422 | |
| 422 | 0 Cost at 31 December 422 |
0 | |
| 422 | 0 Carrying amount at 31 December 422 |
0 |
| Share attributable to the SimCorp Group |
||||||||
|---|---|---|---|---|---|---|---|---|
| ASSOCIATES EUR '000 |
Country of incorporation |
Ownership interest |
Revenue | Profit for the year |
Total assets |
Liabilities | Equity | Profit for the year |
| 2013 | ||||||||
| Dyalog Ltd. | England | 19.9% | 2,325 | 116 | 2,642 | 504 | 22 | |
| Equipos Ltd. | England | 20.0% | 8,520 | -411 | 3,054 | 1,930 | -132 | |
| 1,221 | -111 | |||||||
| 2014 Dyalog Ltd. |
England | 19.9% | 2,518 | 250 | 2,827 | 417 | 338 | 50 |
SimCorp's investment in Dyalog Ltd. is a strategic investment as the company is an important supplier. SimCorp purchases APL licenses from Dyalog Ltd. Please refer note 28.
The disposals from receivables, associates in 2014 is related to repayment of loan from Equipos Ltd. before the acquisition.
On 1 March 2014 SimCorp completed the acquisition of the remaining 80% of the shares in Equipos Ltd.
| PARENT COMPANY | INVESTMENTS IN SUBSIDIARIES | |
|---|---|---|
| 2013 | 2014 | |
| EUR '000 | EUR '000 | |
| Investment | ||
| 24,459 | 26,492 Cost at 1 January | |
| 1 | 59 Foreign exchange adjustment | |
| 2,032 | 10,399 Additions | |
| 26,492 | 36,950 Cost at 31 December | |
| 26,492 | 36,950 Carrying amount at 31 December | |
| 25,709 | 30,016 Dividends received | |
| Receivables from subsidiaries | ||
| 2,448 | 0 Cost at 1 January | |
| -57 | 0 Foreign exchange adjustment | |
| -2,391 | 0 Disposals | |
| 0 | 0 Carrying amount at 31 December |
The addition to investments in subsidiaries in 2014 relates to Equipos Ltd. (now SimCorp Coric Ltd.) and SimCorp Canada Inc. The addition to investments in subsidiaries in 2013 relates to SimCorp Canada Inc.
The disposals from receivables, subsidiaries in 2013 are related to repayment of loan from SimCorp Ltd.
There are no ownership changes during 2014 in the Group's subsidiaries except for the acquition of SimCorp Coric Ltd.
| Ownership | ||||
|---|---|---|---|---|
| interest | Share | |||
| Name | Registered office | in 2014 | capital | |
| SimCorp Ltd.* | London, United Kingdom | 100% | 100,000 GBP | |
| SimCorp GmbH | Bad Homburg, Germany | 100% | 102,000 EUR | |
| SimCorp Österreich GmbH | Vienna, Austria | 100% | 17,500 EUR | |
| SimCorp Norge AS | Oslo, Norway | 100% | 1,000,000 NOK | |
| SimCorp Sverige AB | Stockholm, Sweden | 100% | 100,000 SEK | |
| SimCorp Benelux SA/NV | Brussels, Belgium | 100% | 62,000 EUR | |
| SimCorp USA Inc. | New York, USA | 100% | 7,010,000 USD | |
| SimCorp Schweiz AG | Zurich, Switzerland | 100% | 100,000 CHF | |
| SimCorp Asia Pty. Ltd. | Sydney, Australia | 100% | 1,000,000 AUD | |
| SimCorp Singapore Pte. Ltd. | Singapore, Singapore | 100% | 1 SGD | |
| SimCorp Ukraine LLC | Kiev, Ukraine | 100% | 2,968,000 UAH | |
| SimCorp Canada Inc. | Vancouver, Canada | 100% | 9,000,000 CAD | |
| SimCorp France S.A.S | Paris, France | 100% | 500,000 EUR | |
| SimCorp Hong Kong Ltd. | Hong Kong, China | 100% | 14,000,000 HKD | |
| SimCorp Luxembourg S.A. | Luxembourg, Luxembourg | 100% | 31,000 EUR | |
| SimCorp Coric Ltd.** | Wolverhampton, United Kingdom | 100% | 722,342 GBP |
SimCorp Benelux SA/NV has branches in the Netherlands, Luxembourg and France.
SimCorp Ltd. has a branch in the United Arab Emirates.
SimCorp Sverige AB has a branch in Finland.
SimCorp USA Inc. has a branch in Canada.
*SimCorp Ltd. and SimCorp Development UK Limited were merged effective 31 December 2013.
** SimCorp Coric Ltd. and its subsidiary SimCorp Coric Inc., formerly Equipos Ltd. and Equipos Inc., acquired on 1 March 2014
Newly acquired or newly established enterprises are recognized in the consolidated financial statements from the dates of acquisition. Companies divested or wound up are consolidated in the income statement until the dates that they are divested or wound up.
The takeover method is applied on acquisitions, if the parent company gains control of the companies acquired. Identifiable assets, liabilities and contingent liabilities in companies acquired are measured at their fair values at the dates of acquisition. Identifiable intangible assets are recognized, if they can be separated or arise from a contractual right. Deferred tax is recognized on fair value adjustments.
Any excess of the cost of acquisition over the fair value of the identifiable assets, liabilities and contingent liabilities acquired is recognized as goodwill under intangible assets. Goodwill is not amortized, but is tested for impairment at least once a year.
Acquisition cost consists of the fair value of the purchase price of the enterprise acquired. The net aggregate value of identifiable assets and liabilities is measured in accordance with IFRS 3. Where the final determination of the acquisition price is dependent on future events or fulfillment of agreed terms, recognition of the arising financial liability will be at fair value at the date of acquisition. Contingent considerations are continually remeasured at fair value and adjusted directly in the income statement.
Costs related to acquisitions are charged to the income statement as administration cost at the time of occurrence.
Provisional values are used for initial recognition where there is uncertainty regarding the identification and measurement of acquired assets, liabilities and contingent liabilities at the date of acquisition. Such provisional values can be adjusted or additional assets or liabilities included until 12 months after the acquisition date if new information is available regarding circumstances that existed at the time of acquisition and which would have affected the fair value at the time of acquisition had the information been known. Thereafter no adjustments are made to goodwill, and changes in estimates of contingent consideration relating to business combinations are recognized in the income statement.
The group made one acquisition during 2014 (2013: none). At the end of 2014 the allocation of the purchase price has been finalized for the assets and liabilities acquired in the acquisition of Equipos Ltd. and had the following effect on the Group's consolidated financial statements at the reporting date:
FAIR VALUE AT ACQUISITION
| Preliminary | Adjustment | |||
|---|---|---|---|---|
| EUR '000 | fair value at | to fair value | Reclassification | Fair value at |
| PARENT COMPANY | acquisition | in 2014 | in 2014 | acquisition |
| Intangible assets - customer contracts | 3,377 | 3,377 | ||
| Intangible assets - software | 3,594 | 3,594 | ||
| Property, plant and equipment | 148 | 15 | 163 | |
| Deposits | 72 | -15 | 57 | |
| Deferred tax, asset | 1,436 | -92 | -1,344 | 0 |
| Receivables | 505 | 505 | ||
| Income tax receivable | 0 | 62 | 62 | |
| Cash and cash equivalents | 1,885 | 1,885 | ||
| Deferred tax, liability | -1,418 | 1,282 | -136 | |
| Prepayments from clients | -2,943 | 50 | -2,893 | |
| Trade and other payables | -1,180 | -50 | -1,230 | |
| Identifiable net assets | 5,476 | -92 | 5,384 | |
| Goodwill | 3,833 | 92 | 3,925 | |
| Total consideration | 9,309 | 9,309 | ||
| Value of the equity in Equipos Ltd. already owned | 1,551 | 1,551 | ||
| Cash consideration | 6,943 | 6,943 | ||
| Deferred cash consideration payable in 2017 | 815 | 815 | ||
| Acquisition cost | 9,309 | 9,309 | ||
| Net cash outflow on acquisition completed in 2017 | 7,758 | 7,758 | ||
| Cash and cash equivalents balance acquired | -1,885 | -1,885 | ||
| Net cash outflow on acquisition | 5,873 | 5,873 |
On February 25, 2014, SimCorp announced the acquisition of the remaining 80% shares for a consideration of GBP 8.3m (EUR 10m) in reporting software developer Equipos Ltd. and its flagship product Coric™ Client Communications Suite. Equipos Ltd. is a leading provider of reporting software capabilities; its main product – Coric – is already utilized by some of SimCorp's clients. It is SimCorp's expectation that many more SimCorp Dimension clients as well as new clients will adopt the Coric reporting functionality under SimCorp's full ownership.
Prior to the acquisition SimCorp held 20% ownership in Equipos Ltd. The fair value of the equity interest previously owned in Equipos Ltd. was determined to GBP 1.3m (EUR 1.5m). The acquisition resulted in an accounting gain of EUR 0.7m recorded under financial income.
The most significant assets acquired comprise goodwill, customer contracts, software and trade receivables and the most significant liabilities relates to prepayments from clients and trade and other payables.
As no active market exits for the assets and liabilities acquired, especially in regards to intangible assets, management has estimated the fair value. The methods applied are based on present value of future cash flows calulated based on customer contracts and other expected cash flows related to the assets. Trade receivables has been recognised at the contractual amounts and no adjustments has been required.
Had SimCorp Coric been owned for the entire reporting period, recognized revenue would have been around EUR 6.4m and profit from operations EUR -1.4m. These estimates are based on unaudited financial information and presented for informational purposes only. This information does not represent the results the Group would have achieved had the acquisition occurred on 1 January. In addition, the information should not be used as the basis for or prediction of any annualized calculation.
The deferred purchase price that is conditioned on the continued employment of the founders is in accordance with IFRS 3 treated as compensation for post acquisition services and included in wages and salaries rather than part of the consideration for an acquisition and will be expensed over three years.
The goodwill is attributable to a well positioned business for reporting software capabilities, a highly skilled workforce, buyer synergies and potential for significantly more clients will adopt the reporting functionality from Equipos Ltd. under SimCorp's full ownership.
The goodwill cannot be deducted for tax purposes.
Deposits are primarily related to leasing of offices.
DEPOSITS
Security deposits which will not be returned within one year of the balance sheet date are recognized as non-current assets. Commitments, which require a deposit, will initially be recorded to the deposit asset account, if the deposit is not recovered it is charged to the income statement.
| PARENT COMPANY | GROUP | |||||||
|---|---|---|---|---|---|---|---|---|
| 2013 | 2014 | 2013 | 2014 | |||||
| EUR '000 | EUR '000 | EUR '000 | EUR '000 | |||||
| 1,767 | 1,778 Cost at 1 January | 2,095 | 2,111 | |||||
| 0 | 4 Foreign exchange adjustment | -18 | -4 | |||||
| 15 | 45 Additions | 64 | 63 | |||||
| 0 | 0 Addition on acquisition of subsidiaries | 0 | 57 | |||||
| -4 | -267 Disposals* | -30 | -354 | |||||
| 1,778 | 1,560 Carrying amount at 31 December | 2,111 | 1,873 |
* Disposals include reclassifications to current receivables.
DEFERRED TAX AND CHANGES IN TEMPORARY DIFFERENCES DURING THE YEAR 18
Deferred tax is calculated using the liability method on all temporary differences between the accounting value and the tax value of assets and liabilities, excluding temporary differences relating to goodwill which is not amortizable for tax purposes.
Tax assets are assessed yearly and only recognised to the extent that it is more likely than not that they can be utilized. Deferred tax assets, including the tax value of tax losses carried forward, are recognized in other non-current assets and measured at the amount at which they are expected to be realized, either by setting off tax on future earnings or by setting off deferred tax liabilities within the same legal entity.
Deferred tax is measured based on the tax rules and rates in the respective countries that will apply under the legislation in force on the balance sheet date when the deferred tax asset is expected to crystallize as current tax. Changes in deferred tax resulting from changes in tax rates are recognized in the income statement.
| PARENT COMPANY | GROUP | |||
|---|---|---|---|---|
| 2013 | 2014 | 2013 | 2014 | |
| EUR '000 | EUR '000 | EUR '000 | EUR '000 | |
| 1,700 | 2,139 Deferred tax at 1 January | 5,272 | 6,006 | |
| 0 | 3 Foreign exchange adjustment | -233 | 70 | |
| 0 | 0 Prior-year adjustment, profit and loss | -33 | 215 | |
| 101 | -753 Adjustment of deferred tax, profit and loss | 553 | -364 | |
| 0 | 0 Adjustment of deferred tax, other comprehensive income | 127 | 139 | |
| 550 | 597 Adjustment of deferred tax, equity | 550 | 597 | |
| 0 | 0 Addition on acquisition of subsidiaries | 0 | -136 | |
| -212 | -16 Adjustment of tax rate | -230 | -56 | |
| 2,139 | 1,970 Net deferred tax at 31 December | 6,006 | 6,471 | |
| Deferred tax recognized in the balance sheet as follows: | ||||
| 2,139 | 1,970 Deferred tax assets | 6,219 | 6,984 | |
| 0 | 0 Deferred tax liabilities | -213 | -513 | |
| 2,139 | 1,970 Net deferred tax at 31 December | 6,006 | 6,471 | |
| Deferred tax consists of: | ||||
| -77 | -85 Intangible assets | -77 | -1,468 | |
| 435 | 446 Property, plant and equipment | 736 | 738 | |
| 0 | 0 Current assets | 17 | -270 | |
| 245 | 268 Provisions | 363 | 707 | |
| 44 | 72 Current liabilities | 295 | 380 | |
| 1,492 | 1,269 Share-based payment | 1,492 | 1,269 | |
| 0 | 0 Tax losses carry-forward | 3,180 | 5,115 | |
| 2,139 | 1,970 Net deferred tax at 31 December | 6,006 | 6,471 |
Tax value of the capitalized tax losses are expected to be realized within 3 to 5 years, as the affected subsidiaries expect a positive taxable income going forward. In 2015 EUR 0.6m (2013: 2014 EUR 0.7m) of the deferred tax assets is expected to be utilized.
In 2013 the deferred tax value of tax losses carried forward in SimCorp Luxembourg S.A of EUR 0.2m were not expected to be utilized within a few years and, therefore, were not recognized. However, in 2014 SimCorp Luxembourg S. A. signed an agreement and the tax loss is expect to be utilized.
| CHANGES IN TEMPORARY DIFFERENCES DURING THE YEAR | Recognized | ||||||
|---|---|---|---|---|---|---|---|
| Foreign | Addition on | in other | |||||
| EUR '000 | Balance | exchange | acquisition of | Recognized in | comprehensive | Recognized | Balance |
| GROUP | 1 January | adjustment | subsidiaries | profit and loss | income | in equity | 31 December |
| 2013 | |||||||
| Intangible assets | -132 | 0 | 0 | 55 | 0 | 0 | -77 |
| Property, plant and equipment | 727 | -31 | 0 | 40 | 0 | 0 | 736 |
| Current assets | -53 | 4 | 0 | 66 | 0 | 0 | 17 |
| Provisions | 355 | -38 | 0 | -81 | 127 | 0 | 363 |
| Current liabilities | 354 | -24 | 0 | -35 | 0 | 0 | 295 |
| Share-based payment | 1,037 | 0 | 0 | -95 | 0 | 550 | 1,492 |
| Tax losses carry-forward | 2,984 | -144 | 0 | 340 | 0 | 0 | 3,180 |
| 5,272 | -233 | 0 | 290 | 127 | 550 | 6,006 | |
| 2014 | |||||||
| Intangible assets | -77 | -111 | -1,397 | 117 | 0 | 0 | -1,468 |
| Property, plant and equipment | 736 | 1 | -30 | 31 | 0 | 0 | 738 |
| Current assets | 17 | 0 | 0 | -287 | 0 | 0 | -270 |
| Provisions | 363 | -43 | 18 | 230 | 139 | 0 | 707 |
| Current liabilities | 295 | 15 | 0 | 70 | 0 | 0 | 380 |
| Share-based payment | 1,492 | 3 | 0 | -823 | 0 | 597 | 1,269 |
| Tax losses carry-forward | 3,180 | 205 | 1,273 | 457 | 0 | 0 | 5,115 |
| 6,006 | 70 | -136 | -205 | 139 | 597 | 6,471 |
RECEIVABLES 19
Receivables are measured at cost. If there is objective evidence of impairment of a receivable, it is written down. Write-downs are made individually. The write-down is recognized in the income statement under administrative expenses.
| PARENT COMPANY | GROUP | |||
|---|---|---|---|---|
| 2013 | 2014 | 2013 | 2014 | |
| EUR '000 | EUR '000 | EUR '000 | EUR '000 | |
| 2,239 | 2,480 Receivables from clients | 26,095 | 32,152 | |
| 12,259 | 17,366 Receivables from subsidiaries | - | - | |
| 1,576 | 1,928 Accrued revenue | 22,007 | 24,682 | |
| 536 | 586 Other receivables | 1,234 | 1,160 | |
| 16,610 | 22,360 Total receivables at 31 December | 49,336 | 57,994 | |
| The aging of trade receivables from clients was at 31 December: | ||||
| 1,294 | 2,153 Not due | 22,608 | 21,039 | |
| 937 | 255 Not more than 30 days | 2,229 | 4,507 | |
| 8 | 72 More than 30 days but not more than 90 days | 871 | 3,466 | |
| 0 | 0 More than 90 days | 387 | 3,140 | |
| 2,239 | 2,480 Total | 26,095 | 32,152 |
Accrued revenue consists mainly of revenue from sale of software licenses and receivables from contracts in progress, see note 25.
No security has been received with respect to trade receivables.
The need for impairment was based on an individual assessment of each receivable.
No write-down has been made in 2014 and 2013 for trade receivables.
The Group's exposure to currency and credit risk for trade receivables is disclosed in note 29.
Dividends are recognized as a liability when declared by the shareholders in general meeting. Dividends recommended to be paid for the year are stated as a separate line item under equity until approved at the Annual General Meeting.
Treasury shares acquired by the parent company are recognized in the balance sheet at zero value. Proceeds on the purchase and sale of treasury shares and dividends from such shares are recognized in equity, including proceeds from the disposal of treasury shares in connection with the exercise of share options and sale of employee shares.
The exchange adjustment reserve in the consolidated financial statements comprises foreign exchange differences arising on the translation of the financial statements of enterprises from their functional currencies to the SimCorp Group's presentation currency (EUR).
On full or partial realization of a net investment, foreign exchange adjustments are recognized in the income statement.
| At 31 December | 43,500,000 | 41,500,000 | 5,844 | 5,575 |
|---|---|---|---|---|
| At 1 January Cancellation of treasury shares |
45,000,000 -1,500,000 |
43,500,000 -2,000,000 |
6,045 -201 |
5,844 -269 |
| 2013 | 2014 | 2013 | 2014 | |
| shares | shares | EUR '000 | EUR '000 | |
| SHARE CAPITAL | Number of | Number of | value | value |
| Nominal | Nominal | |||
At 31 December 2014, the share capital amounted to DKK 41,500,000 divided into 41,500,000 shares of DKK 1 nominal value (2013: DKK 43,500.000 divided into 43,500,000 shares of DKK 1 nominal) after cancelling of 2.000.000 (2013: 1.500.000) treasury shares of DKK 1 nominal value. The company's shares are traded on NASDAQ OMX Copenhagen in denominations of DKK 1. Until 3 June 2013 the trading denominations was DKK 10. No shares confer any special rights upon any shareholder. No shares are subject to restrictions on transferability or voting rights.
The share capital may be increased in one or more issues by a total nominal amount of up to DKK 5,000,000 (5,000,000 shares of DKK 1 nominal value) as directed by the Board of Directors with respect to time and terms. This authority is valid for a period of five years, expiring on 1 March 2018, and may be extended by the shareholders for one or more periods of up to five years at a time. The capital increase may be effected by cash payment or otherwise. The capital increase may be effected without pre-emption rights to the company's existing shareholders, if the shares are issued at market price or as consideration for the company's acquisition of an existing operation or specific assets of a value that equals the value of the shares issued. Except for the cases specified in the preceding period, the company's existing shareholders shall have a right to subscribe new shares proportionately to their existing holdings. The new shares shall be negotiable instruments, and no restrictions shall apply to the transferability of the shares. No shareholders shall be under an obligation to have their shares redeemed in full or in part by the company or any other party.
Unless Danish legislation provides for a greater majority or unanimity, the adoption of resolutions regarding amendments to the company's articles of association and the company's dissolution or merger with another company requires a majority of not less than two thirds of all the votes cast as well as of the voting share capital represented at the relevant general meeting, and that not less than 50% of the share capital is represented at the general meeting. In case less than 50% of the share capital is represented at the general meeting, and the resolution is adopted by not less than two thirds of the votes cast as well as of the voting share capital represented at the general meeting, another general meeting may be called within 14 days after the preceding general meeting. At the new general meeting, the resolution can be adopted by not less than two thirds of the votes cast as well as of the voting share capital represented at the general meeting.
Refer to pages 42 to 45 for additional information.
| TREASURY SHARES | Number of shares 2013 |
Number of shares 2014 |
Acquisition value EUR '000 2013 |
Acquisition value EUR '000 2014 |
Percent of share capital 2013 |
Percent of share capital 2014 |
|---|---|---|---|---|---|---|
| At 1 January | 2,444,020 | 2,147,241 | 33,448 | 47,356 | 5.4 | 4.9 |
| Foreign exchange adjustment | 1 | 96 | - | - | ||
| Purchases | 1,881,651 | 968,910 | 42,850 | 24,455 | 4.3 | 2.3 |
| Cancellation | -1,500,000 | -2,000,000 | -20,693 | -43,989 | -3.3 | -4.6 |
| Restricted stock units program | -103,110 | -106,399 | -1,459 | -2,385 | -0.2 | -0.3 |
| Options exercised | -511,970 | -7,500 | -5,954 | -198 | -1.2 | 0.0 |
| Sold to employees | -63,350 | 0 | -837 | 0 | -0.1 | 0.0 |
| At 31 December | 2,147,241 | 1,002,252 | 47,356 | 25,335 | 4.9 | 2.3 |
The market value of treasury shares at 31 December 2014 was EUR 21.9m (2013: EUR 61.4m). The shares are carried at EUR 0.0m in the financial statements. The Board of Directors has been authorized to let the company acquire treasury shares of up to a total nominal value of 10% of the company's share capital including the company's current holding of treasury shares.
In 2014, SimCorp A/S acquired 968,910 treasury shares at an average price of DKK 187,88 per share equal to a purchase price of EUR 24.6m (2013: 1,881,651 treasury shares at an average price of DKK 169.89 per share equal to a purchase price of EUR 42.9m).
In 2014, SimCorp A/S delivered 106,399 treasury shares as part of the share based remuneration program for a nominal value of DKK 106,399 (2013: DKK 103,110 shares) calculated at an average market price of DKK 218.99 per share (2013: DKK 153.67 per share of DKK 1), equal to a calculated price of EUR 3.1m (2013: EUR 2.1m).
In 2014, SimCorp A/S sold 7,500 shares in connection with the exercise of share options as part of the employee share program (2013: 511,970 exercised share options and 63,350 shares sold to employees) at a calculated market price of DKK 214,42, equal to a calculated selling price of EUR 10.6m.
The company acquires treasury shares for the purpose of covering the Group's incentive programs, among other things.
The Board of Directors regularly assesses the need for adjusting the capital structure, including the requirement for cash, credit facilities and equity.
SimCorp pursues a dividend policy to the effect that, when cash resources exceed 10% of an upcoming year's projected costs, the company will pay minimum 50% of the profit for the year by way of dividend. In addition, the company will buy treasury shares provided that it does not anticipate specific cash requirements.
Distribution of dividends to shareholders has no tax consequences for the company.
The Board of Directors intends to recommend to the shareholders at the annual general meeting that dividends of EUR 24.6m (2013: EUR 22.2m), equal to DKK 4.50 (2013: DKK 4.00) per 1 share, be distributed and that the company be authorized to acquire treasury shares for up to 10% of the company's share capital.
A provision is recognized when the Group has a legal or constructive obligation as a result of a past event and it is probable that an outflow of the Group's resources will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
The Group has an obligation to re-establish and refurbish leased offices when the premises are vacated, a provision is recognized corresponding to the present value of expected future costs. The present value of the obligation is included in the cost of the tangible asset and depreciated accordingly.
In valuing provisions, the costs estimated to settle the liability are discounted if such discounting would have a material effect on the measurement of the liability. A pre-tax discount rate is used that reflects the level of interest rates and risks associated with the liability. Changes in the discounting element during the year are recognized as financial expenses.
| PROVISIONS | Re-establisment | ||
|---|---|---|---|
| EUR '000 | costs for | Anniversary | |
| PARENT COMPANY | rented premises | bonuses | Total |
| 2013 | |||
| Liability at 1 January | 834 | 511 | 1,345 |
| Used during the year | 0 | -50 | -50 |
| Reversal of unused liabilities | -204 | -24 | -228 |
| Provisions for the year | 37 | 128 | 165 |
| Total provisions | 667 | 565 | 1,232 |
| Expected due dates for provisions: | |||
| Falling due within 1 year | 0 | 14 | 14 |
| Falling due within 2 to 5 years | 667 | 53 | 720 |
| Falling due after 5 years | 0 | 498 | 498 |
| Total provisions | 667 | 565 | 1,232 |
| 2014 | |||
| Liability at 1 January | 667 | 565 | 1,232 |
| Foreign exchange adjustment | 0 | 2 | 2 |
| Used during the year | -93 | -15 | -108 |
| Reversal of unused liabilities | 0 | -49 | -49 |
| Provisions for the year | 134 | 141 | 275 |
| Total provisions | 708 | 644 | 1,352 |
| Expected due dates for provisions: | |||
| Falling due within 1 year | 109 | 24 | 133 |
| Falling due within 2 to 5 years | 599 | 50 | 649 |
| Falling due after 5 years | 0 | 570 | 570 |
| Total provisions | 708 | 644 | 1,352 |
Provisions cover the costs of restoring leasehold premises and provisions for anniversary bonuses. The latter resulting from the Group's commitment of one month's pay in connection with employees' 25th and 40th anniversary.
| PROVISIONS | Re-establisment | ||||
|---|---|---|---|---|---|
| EUR '000 GROUP |
costs for rented premises |
Anniversary bonuses |
Pension | Other | Total |
| 2013 | |||||
| Liability at 1 January | 1,278 | 1,042 | 679 | 0 | 2,999 |
| Foreign exchange adjustment | -21 | -47 | -18 | 0 | -86 |
| Used during the year Reversal of unused liabilities |
0 -204 |
-109 -258 |
0 0 |
0 0 |
-109 -462 |
| Provisions for the year | 49 | 433 | 489 | 4 | 975 |
| Total provisions | 1,102 | 1,061 | 1,150 | 4 | 3,317 |
| Expected due dates for provisions: | |||||
| Falling due within 1 year | 74 | 66 | 0 | 0 | 140 |
| Falling due within 2 to 5 years | 825 | 445 | 0 | 0 | 1,270 |
| Falling due after 5 years | 203 | 550 | 1,150 | 4 | 1,907 |
| Total provisions | 1,102 | 1,061 | 1,150 | 4 | 3,317 |
| 2014 | |||||
| Liability at 1 January | 1,102 | 1,061 | 1,150 | 4 | 3,317 |
| Foreign exchange adjustment | 19 | 13 | -16 | 0 | 16 |
| Used during the year | -93 | -21 | 0 | 0 | -114 |
| Reversal of unused liabilities | 0 | -49 | 0 | 0 | -49 |
| Provisions for the year | 148 | 186 | 818 | 65 | 1,217 |
| Total provisions | 1,176 | 1,190 | 1,952 | 69 | 4,387 |
| Expected due dates for provisions: | |||||
| Falling due within 1 year | 184 | 24 | 0 | 0 | 208 |
| Falling due within 2 to 5 years | 765 | 537 | 0 | 69 | 1,371 |
| Falling due after 5 years | 227 | 629 | 1,952 | 0 | 2,808 |
| Total provisions | 1,176 | 1,190 | 1,952 | 69 | 4,387 |
Provisions cover the costs of restoring leasehold premises and provisions for anniversary bonuses. The latter resulting from the Group's commitment of one month's pay in connection with employees' 25th and 40th anniversary.
The Group has entered into pension and similar agreements with most employees.
Obligations relating to defined contribution plans are recognized in the income statement in the period in which they are earned, and payments due are recognized in the balance sheet under other payables. For defined benefit plans, annual actuarial calculations are made of the net present value of future benefits to be paid under the plan. The net present value is calculated based on assumptions of the future developments of salary, interest, inflation and mortality rates.
The net present value is only calculated for those benefits earned to date by employees. The present value of future pension payments is estimated actuarially and shown net of the fair value of any plan assets in the balance sheet as pension obligations.
Differences between calculated pension assets and liabilities and their realized values are termed actuarial gains and losses. Actuarial gains and losses are recognized in the statement of comprehensive income.
Any change in benefits earned to date are actuarially calculated and expensed immediately when the employees have already earned the right to the changed benefits. Otherwise, they are recognized in the income statement over the period during which the employees earn the right to the benefits.
| PENSIONS AND SIMILAR LIABILITIES | ||
|---|---|---|
| EUR '000 GROUP |
2013 | 2014 |
| Pension liabilities | ||
| At 1 January | 4,861 | 5,773 |
| Foreign exchange adjustment and other adjustments | -464 | -73 |
| Employee contributions | 167 | 147 |
| Expensed in the income statement | 375 | 391 |
| Calculated interest | 116 | 161 |
| Actuarial loss/(gain) change in demographic assumptions | 319 | 332 |
| Actuarial loss/(gain) change in financial assumptions | 9 | 273 |
| Payroll taxes | -24 | -35 |
| Benefits paid | 414 | -145 |
| Present value of pension liabilities at 31 December | 5,773 | 6,824 |
| Fair value of plan assets | ||
| At 1 January | 3,703 | 4,623 |
| Foreign exchange adjustment | -225 | -57 |
| Calculated interest | 85 | 105 |
| Return on plan assets in addition to calculated interest | 155 | -187 |
| Employee contributions | 167 | 147 |
| Employer contributions | 335 | 396 |
| Benefits paid | 403 | -155 |
| Fair value of plan assets at 31 December | 4,623 | 4,872 |
| Switzerland | Norway | |||
|---|---|---|---|---|
| ASSET ALLOCATION AT 31 DECEMBER | 2013 | 2014 | 2013 | 2014 |
| Shares | 9% | 13% | ||
| Bonds/mortgage bonds | 62% | 72% | ||
| Property | 11% | 12% | ||
| Other financial assets | 18% | 3% | ||
| Assets held at Allianz Suisse collective foundation | 100% | 100% | ||
| Total | 100% | 100% | 100% | 100% |
| MOST IMPORTANT ASSUMPTIONS FOR ACTUARIAL CALCULATIONS | Switzerland | |||
|---|---|---|---|---|
| 2013 | 2014 | 2013 | 2014 | |
| Discount rate | 2.3% | 1.6% | 4.0% | 3.0% |
| Future salary increases | 2.0% | 2.0% | 3.8% | 3.3% |
Significant actuarial assumptions for the determination of the pension benefit liability are discount rate and expected future remuneration increases. The sensitivity analysis below have been determined based on reasonable likely changes in assumptions occurring at the end of the period.
| SENSITIVITY ANALYSIS ON REPORTED PENSION LIABILITES | Switzerland | |||
|---|---|---|---|---|
| EUR '000 | 2013 | 2014 | 2013 | 2014 |
| Discount rate +1% | -424 | -532 | -38 | -41 |
| Discount rate -1% | 605 | 754 | 51 | 56 |
| Future remuneration +1% | 94 | 115 | 28 | 30 |
| Future remuneration -1% | -82 | -102 | -24 | -25 |
The sensitivities consider the single change shown with the other assumptions assumed to be unchanged. In practice, changes in one assumption may be accompanied by offsetting changes in another assumption (although this is not always the case).
The Group expects to pay EUR 394 thousand to the defined benefit pension plans in 2015 (2013: EUR 314 thousand for the year 2014). For defined contribution plans, the employer is obliged to pay a defined contribution (for example a fixed percentage of an employee's salary) to independent insurance companies. For a defined contribution plan, the Group runs no risk in respect of future developments in interest rates, inflation, mortality or disability.
The pension obligations of the Parent company and the majority of foreign subsidiaries are covered by insurance (defined contribution plans).
For a few foreign subsidiaries the pension obligations are not or only partly covered by insurance (defined benefit plans).
Under defined benefit plans, the employer is obliged to pay a defined benefit (for example a fixed percentage of an employee's final salary) to the employee after retirement. Under a defined benefit plan, the Group carries the risk in respect of future developments in interest rates, inflation, mortality or disability.
The Group's Norwegian and Swiss subsidiaries have defined benefits pension plans comprising a total of 32 employees (2013: 32). The plans entitle the employees to defined future benefits. These primarily depend on number of years of service, salary level at retirement age and the size of the national pension.
The actuarial assessments of assets and liabilities in the Norwegian defined benefit plan have been done by Storebrand Pensjonstjenester AS (Norway) on basis of standardized assumptions, prepared by Forsikringsnæringens Hovedorganisasjon (Norway), regarding life expectancy and other demographic factors. Specifically the tariff K2013BE has been applied. For the Swiss defined benefit plan the actuarial assessments of assets and liabilities have been done by Allea Ltd (Switzerland) on basis of standardized assumptions, prepared by Swiss Association of Actuaries, regarding life expectancy and other demographic factors.
23 TRADE PAYABLES AND OTHER PAYABLES
Other payables include vacation pay obligations, payroll taxes and VAT. Payables are measured at cost.
| PARENT COMPANY | GROUP | ||
|---|---|---|---|
| 2013 | 2014 | 2013 | 2014 |
| EUR '000 | EUR '000 | EUR '000 | EUR '000 |
| 4,035 | 3,143 Trade payables 6,864 |
6,929 | |
| 14,619 | 14,293 Debt to subsidiaries - |
- | |
| 7,718 | 7,566 Accrued vacation payable 9,858 |
9,834 | |
| 4,563 | 4,593 Bonus and commissions payable 11,612 |
12,530 | |
| 55 | 97 Payroll taxes, VAT etc., payable 5,164 |
6,246 | |
| 30,990 | 29,692 Total trade payables and other payables 33,498 |
35,539 |
The Group's exposure to currency and liquidity risk for trade payables and other payables is disclosed in note 29.
INCOME TAX
Estimated tax payable or receivable on the taxable income for the year is recognized in the balance sheet as current tax liabilities and receivables adjusted for tax on prior years' taxable income and payments on account.
Tax on profit for the year comprises current tax and movements in the financial year in deferred tax made up in accordance with the liability method.
| PARENT COMPANY | GROUP | ||
|---|---|---|---|
| 2013 | 2014 | 2013 | 2014 |
| EUR '000 | EUR '000 | EUR '000 | EUR '000 |
| -946 | 647 Payable at 1 January 1,380 |
1,417 | |
| -1 | 1 Foreign exchange adjustment -386 |
-32 | |
| 219 | -1 Prior-year adjustments 238 |
77 | |
| 3,928 | 5,963 Current tax on profit for the year 14,722 |
15,651 | |
| -149 | -276 Tax on equity items -149 |
-276 | |
| 0 | 0 Addition on acquisition of subsidiaries 0 |
-62 | |
| -2,404 | -5,350 Income tax paid -14,388 |
-15,018 | |
| 647 | 984 Total payable income tax, net 1,417 |
1,757 | |
| Which is distributed as follows: | |||
| 0 | 0 Income tax receivable -1,223 |
-1,667 | |
| 647 | 984 Income tax payable 2,640 |
3,424 | |
| 647 | 984 Total payable income tax, net 1,417 |
1,757 |
Contracts in progress relating to professional services are measured at the estimated sales value of the proportion of the contract completed at the balance sheet date. Amounts invoiced on account in excess of work completed are included in prepayments under current liabilities.
| PARENT COMPANY | |||
|---|---|---|---|
| PARENT COMPANY | GROUP | |||
|---|---|---|---|---|
| 2013 | 2014 | 2013 | 2014 | |
| EUR '000 | EUR '000 | EUR '000 | EUR '000 | |
| 0 | 966 Income recognized sales value of contracts in progress | 9,117 | 10,509 | |
| 0 | -917 Payments received on account | -6,807 | -10,390 | |
| 0 | 49 Contracts in progress | 2,310 | 119 | |
| Which are recognised as follows: | ||||
| 0 | 76 Contracts in progress relating to professional services (assets) | 3,115 | 1,123 | |
| 0 | -27 Contracts in progress relating to professional services (liabilities) | -805 | -1,004 | |
| 0 | 49 Contracts in progress | 2,310 | 119 |
Contracts in progress relating to professional services are recognized in accrued revenue, see note 19.
For operating leases, the lease payments are recognized in the income statement on a straight line basis over the lease period.
| PARENT COMPANY | GROUP | |||
|---|---|---|---|---|
| 2013 | 2014 | 2013 | 2014 | |
| EUR '000 | EUR '000 | EUR '000 | EUR '000 | |
| Rent commitments | ||||
| 5,602 | 5,692 Payable within 1 year | 9,241 | 9,689 | |
| 19,470 | 12,575 Payable within 2 to 5 years | 29,376 | 21,343 | |
| 0 | 0 Payable after 5 years | 2,136 | 1,532 | |
| 25,072 | 18,267 Rent commitments until expiry of minimum term of tenancy | 40,753 | 32,564 | |
| Other commitments | ||||
| 53 | 132 Payable within 1 year | 506 | 682 | |
| 13 | 165 Payable within 2 to 5 years | 552 | 820 | |
| 66 | 297 Total other commitments | 1,058 | 1,502 | |
| Total commitments | ||||
| 5,655 | 5,824 Payable within 1 year | 9,747 | 10,371 | |
| 19,483 | 12,740 Payable within 2 to 5 years | 29,928 | 22,163 | |
| 0 | 0 Payable after 5 years | 2,136 | 1,532 | |
| 25,138 | 18,564 Total commitments | 41,811 | 34,066 |
Amounts of EUR 10.8m (2013: EUR 9.8m) relating to operating leases in the Group and EUR 5.8m (2013: EUR 5.4m) in the parent company have been recognized in the income statement for 2014. The Group's other liabilities comprise operating leases for operating equipment, generally with a lease period of between two and five years.
In November 2008 SimCorp moved into the headquarters at Weidekampsgade 16, Copenhagen. The lease has been entered into on market terms and with normal rent adjustment clauses. SimCorp has served notice on around 2000 m² which will be vacated latest mid October 2015. The initial lease is for a period of ten years, with an option to extend for up to 20 years from the commencement of the lease.
All the Group's leases are with an option to extend and are made on market terms with normal rent adjustment clauses and no right of first refusal.
In some contracts, as part of building long-term client relationships, the company has made a commitment to provide SimCorp Dimension product support for up to eight years from the date of the contract.
SimCorp A/S has issued guarantees for its subsidiaries' delivery commitments to clients for a total of EUR 21.0m (2013: EUR 20.6m).
The parent company expects to issue letters of support to certain subsidiaries.
Bank guarantees have been provided for rent commitments in Austria, Australia, Belgium, France, Germany, Luxembourg, Sweden and USA.
The Group is a party to inquiries from authorities when investigating various issues. The outcome of such is not expected to have a significant effect on profit for the year and the assessment of the Group's financial position.
On 13 March 2014, the Court of Justice of the European Union ("ECJ") published its judgment in the case C-464/12 ATP PensionService A/S determining that services provided to certain pension funds are covered by the VAT exemption in section 13, subsection 1, no. 11, litra c and f of the Danish VAT Act.
As a consequence of the ECJ ruling, 11 of SimCorp's Danish customers have filed a claim against SimCorp for recovery of the VAT levied on SimCorp's products and services. Pursuant to the Danish Tax Administration act, SimCorp has claimed a refund from the Danish Tax Authorithies ("SKAT") of the VAT collected on services provided to its Danish customers.
SKAT has communicated that they will await the final ruling from the Danish High Court before providing guidance on the consequences of the ECJ ruling, and thus it is unclear whether the affected SimCorp's customers will be entitled to a refund of the VAT, either fully or in part. However, based on previous practice in similar cases, SimCorp does not expect the outcome to significantly have an effect on profit for the year and the assessment of the Group's financial position and accordingly, SimCorp has not made a provision for this in its annual accounts 2014.
SimCorp's related parties exercising a significant influence comprise the company's Board of Directors and Executive Management Board as well as relatives of these persons. Related parties also comprise companies in which the individuals mentioned above have material interests.
For the parent company, related parties also comprise subsidiaries and associates, see notes 9 and 15, in which SimCorp A/S has a controlling or significant influence.
The Group did not enter into any agreements, deals or other transactions in 2014 in which the parent company's Board of Directors or Executive Management Board had a financial interest, except for transactions following from the employment relationship. See note 5 and 6.
| PARENT COMPANY | GROUP | ||
|---|---|---|---|
| 2013 | 2014 | 2013 | 2014 |
| EUR '000 | EUR '000 | EUR '000 | EUR '000 |
| Trading with subsidiaries and associates has involved the following: | |||
| 17,717 | 18,907 Purchases of services from subsidiaries - |
- | |
| 625 | 589 Purchases of services from associates 655 |
589 | |
| 86,141 | 96,099 Sale of services to subsidiaries - |
- |
Transactions with subsidiaries have been eliminated in the consolidated financial statement in accordance with the accounting policies applied.
The parent company's outstanding balance with subsidiaries and associates is specified in note 15. There are no outstanding loan accounts with subsidiaries in 2014 (2013: none) and with associates no outstanding loan accounts in 2014 (2013: EUR 0.4m). The loans fall due for payment when the companies have excess liquidity.
In addition, balances with subsidiaries and associates comprise ordinary trade balances relating to the purchase and sale of services. Outstanding balances carry interest and are subject to terms and conditions identical to those made with the parent company's and the Group's clients and suppliers.
Trading with subsidiaries and associates of the SimCorp Group is conducted on arm's length terms. Ownership interests are shown in note 15.
Interest on outstanding balances with subsidiaries and associates is specified in notes 10 and 11.
The parent company has in 2014 received dividends of EUR 30.0m (2013: EUR 25.7m) from subsidiaries. The parent company has in 2014 received 0.02m dividends (2013: 0.02m) from associates.
The parent company has provided delivery bonds to certain clients of its subsidiaries, and the parent company has issued letters of support to certain subsidiaries, see note 27.
| INTERESTS IN THE COMPANY OF MEMBERS OF THE BOARD OF DIRECTORS AND THE EXECUTIVE MANAGEMENT BOARD | 2013 | 2014 |
|---|---|---|
| Number of Shares |
Number of Shares |
|
| Shareholdings: | ||
| Board of Directors: | ||
| Jesper Brandgaard | 81,140 | 84,915 |
| Peter Schütze | 7,790 | 8,697 |
| Herve Couturier | 6,490 | 7,098 |
| Simon Jeffreys | 7,930 | 8,837 |
| Patrice McDonald | - | 547 |
| Jacob Goltermann | 11,510 | 12,827 |
| Raymond John | 2,930 | 3,158 |
| Board of Directors, total | 117,790 | 126,079 |
| Executive Management Board: | ||
| Klaus Holse | 50,000 | 50,000 |
| Georg Hetrodt | 113,540 | 125,370 |
| Thomas Johansen | 4,000 | 10,930 |
| Executive Management Board, total | 167,540 | 186,300 |
| Total shareholdings by members of the Board of Directors and the Executive Management Board | 285,330 | 312,379 |
| Restricted stock units: | ||
| Board of Directors: | ||
| Raymond John | 0 | 422 |
| Jacob Goltermann | 590 | 662 |
| Board of Directors, total | 590 | 1,084 |
| Executive Management Board: | ||
| Klaus Holse | 127,610 | 134,904 |
| Georg Hetrodt | 35,679 | 25,977 |
| Thomas Johansen | 38,298 | 28,242 |
| Executive Management Board, total | 201,587 | 189,123 |
| Total restricted stock units granted to members of the Board of Directors and the Executive Management Board | 202,177 | 190,207 |
Key Management Personnel (cf. IAS 24) consists of the Board of Directors and the Executive Management Board.
Remuneration to members of the Board of Directors and the Executive Management Board is disclosed in note 5.
Members of the Board of Directors are elected by the shareholders at the annual general meeting for terms of one year. Members of the Board of Directors elected by the employees are elected among all SimCorp Group employees every third year. Election was held in February/March 2013. Refer to pages 38 and 39 for additional information on Board of Directors members.
Candidates for Board membership may not have turned 70 years of age on the date of the general meeting at which the election takes place.
Due to the nature of its operations, investments and financing, the Group is exposed to changes in exchange rates and interest rates. The Group's policy is to direct financial management towards the management of financial risks related to operations and finance. The Group's financial risks are managed centrally by the Group Finance department according to policies committed to writing and approved by the Board of Directors. The purpose is to ensure efficient liquidity management. Excess liquidity is transferred to SimCorp A/S which operates as the internal bank for the Group.
The scope and nature of the Group's financial instruments appear from the income statement and the balance sheet in accordance with the accounting policies applied. Provided below is information about factors that may influence amounts, time of payment or reliability of future payments, where such information is not provided directly in the financial statements or is subject to customary practice.
This note addresses only financial risks directly related to the Group's financial instruments. The Group's most important operational and commercial risk factors are described in more detail on pages 20 to 23 of the report.
Currency risk is the risk that arises from changes in exchange rates and affects the Group's result. The Group's foreign subsidiaries are not severely impacted by foreign exchange fluctuations, as both income and costs are generally settled in the functional (local) currency of the individual entity.
The consolidated income statement is impacted by changes in exchange rates. The results of foreign subsidiaries are translated from their functional currency to EUR at the exchange rate ruling on the transaction date. The average exchange rate for the month is used to reflect the transaction date's exchange rate.
The Group's foreign exchange policy is to balance incoming and outgoing payments in local currency as much as possible and generally seek to ensure that an increasing number of contracts entered into are EUR-denominated. When placing surplus funds, the Group generally seeks to minimize its net exposure in individual currencies. At the balance sheet date, SimCorp A/S had no financial hedges (2013: none).
Currency exposures of investments in subsidiaries have not been hedged. The related exchange rate adjustments are recognized in other comprehensive income.
The table below shows currency exposure to each currency as at the balance sheet date based on the functional currencies of the individual Group companies.
| 2013 | 2014 | ||||||
|---|---|---|---|---|---|---|---|
| Cash/ | Cash/ | ||||||
| equivalents | Receivables | Debt | Net position | Debt | Net position | ||
| 35,468 | 8,930 | 18,459 | 25,939 | 23,225 | 8,649 | 16,620 | 15,254 |
| 0 | 3 | 856 | -853 | 0 | 7 | 965 | -958 |
| 0 | 0 | 1,061 | -1,061 | 0 | 0 | 617 | -617 |
| 693 | 8,969 | 7,983 | 1,679 | 3,496 | 14,346 | 6,686 | 11,156 |
| 32 | 2,743 | 1,510 | 1,265 | 4 | 889 | 923 | -30 |
| 0 | 0 | 713 | -713 | 0 | 0 | 2,313 | -2,313 |
| 0 | 0 | 647 | -647 | 20 | 647 | 162 | 505 |
| 0 | 0 | 853 | -853 | 1 | 0 | 1,447 | -1,446 |
| 0 | 0 | 693 | -693 | 0 | 0 | 1,540 | -1,540 |
| 0 | 1,965 | 0 | 1,965 | 0 | 3,422 | 0 | 3,422 |
| 0 | 428 | 0 | 428 | 0 | 0 | 215 | -215 |
| 0 | 0 | 344 | -344 | 0 | 0 | 564 | -564 |
| 36,193 | 23,038 | 33,119 | 26,112 | 26,746 | 27,960 | 32,052 | 22,654 |
| equivalents Receivables |
CURRENCY EXPOSURE
EUR '000 2013 2014
| Cash/ | Cash/ | |||||||
|---|---|---|---|---|---|---|---|---|
| GROUP | equivalents | Receivables | Debt | Net position | equivalents | Receivables | Debt | Net position |
| EUR/DKK | 693 | 1,417 | 41 | 2,069 | 3,496 | 1,882 | 202 | 5,176 |
| EUR/CHF | 261 | 0 | 0 | 261 | 71 | 1,195 | 0 | 1,266 |
| EUR/GBP | 0 | 331 | 0 | 331 | 32 | 570 | 0 | 602 |
| USD/SGD | 0 | 174 | 0 | 174 | 196 | 299 | 0 | 495 |
| USD/GBP | 0 | 475 | 6 | 469 | 79 | 1,821 | 0 | 1,900 |
| CAD/USD | 123 | 1,028 | 0 | 1,151 | 187 | 1,274 | 155 | 1,306 |
| Cash/ | |||
|---|---|---|---|
| equivalents | Receivables | Debt | Net position |
Based on the net exposure of the parent company and the Group, the hypothetical impact on the profit before tax for the year and equity, of exchange rate fluctuations is as follows:
| 2013 | 2014 | |||
|---|---|---|---|---|
| Impact on net | Impact on net | |||
| Change in | position | Change in | position | |
| PARENT COMPANY | exchange rate | EUR '000 | exchange rate | EUR '000 |
| SEK | 10% | -85 | 10% | -96 |
| NOK | 10% | -106 | 10% | -62 |
| GBP | 10% | 127 | 10% | -3 |
| CHF | 5% | -36 | 15% | -347 |
| USD | 10% | -65 | 10% | 51 |
| AUD | 10% | -85 | 10% | -145 |
| SGD | 10% | -69 | 10% | -154 |
| CAD | 10% | 197 | 10% | 342 |
| HKD | 10% | 43 | 10% | -22 |
| UAH | 10% | -34 | 30% | -169 |
| Change in | Change in | |||
| GROUP | cross rate | EUR '000 | cross rate | EUR '000 |
| EUR/CHF | 5% | 13 | 15% | 190 |
| EUR/GBP | 5% | 17 | 10% | 60 |
| USD/SGD | 10% | 17 | 10% | 50 |
| USD/GBP | 5% | 23 | 10% | 190 |
| CAD/USD | 5% | 58 | 5% | 65 |
A corresponding fall in the cross rate would have an equivalent opposite effect on profit after tax and equity.
The sensitivity analysis has been prepared at the balance sheet date based on the exposure towards the listed currencies at the balance sheet date, without taking in to account potential effects on interest rate levels, effect on other currencies etc.
The Group's and the parent company's interest rate risks are generally related to its bank deposits.
SimCorp A/S had bank deposits of EUR 26.8m at 31 December 2014 (2013: EUR 36.2m) carrying a variable rate of interest based on the money market rate. The effective rate of interest varies with the currency and, made up at the balance sheet date, fluctuated between -0.3-0.6% in 2014 (2013: 0.0-0.6%) for significant deposits.
The Group had bank deposits of EUR 38.0m at 31 December 2014 (2013: EUR 47.1m) carrying a variable rate of interest based on the money market rate. The effective rate of interest varies with the currency and, made up at the balance sheet date, fluctuated between 0.0-0.2% in 2014 (2013: 0.0-0.6%) for significant deposits.
The Group had no long-term loans. SimCorp A/S held EUR 0.7m in bonds issued to the employees of SimCorp A/S which mature on 1 January 2015 and carry a fixed interest rate of 2% p.a.
Accordingly, a change in interest rate levels as at the balance sheet date would have no impact on profit before tax or equity.
If interest rates increased by one percentage point, the interest rate sensitivity as calculated based on quarterly cash deposits at the end of the quarters in 2014 and 2013, respectively, would have a positive profit impact of EUR 0.27m (2013: EUR 0.36m) in the parent company and of EUR 0.38m (2013: EUR 0.47m) in the Group. A corresponding fall in interest rates would have an opposite impact.
The impact of change in interest levels on the equity of the parent company and the Group does not deviate significantly from the impact on the profit and loss for the year.
It is SimCorp's policy that cash reserves must exceed 10% of the coming year's expected costs.
The Group's cash reserve comprises cash and cash equivalents and unutilized credit facilities. The Group aims to have sufficient cash resources to allow it to continue to operate adequately in case of unforeseen fluctuations in cash. The Group has unused credit facilities in banks of EUR 7.4m (2013: EUR 7.4m). The current cash position and expected cash flow for 2015 are considered to be adequate to meet the obligations of the Group as they fall due.
The following table indicates when the current and non-current liabilities including interest per 31.12.2014 and 31.12.2013, respectively, are expected to fall due:
LIABILITIES AT 31 DECEMBER
| Current | Non-current | |||||||
|---|---|---|---|---|---|---|---|---|
| EUR '000 | 1 to 6 | 1 to 6 | 7 to 12 | 7 to 12 | 1 to 5 | 1 to 5 | Later than | Later than |
| months | months | months | months | years | years | 5 years | 5 years | |
| PARENT COMPANY | 2013 | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | 2014 |
| Prepayments from clients | 151 | 100 | 1 | 0 | 0 | 76 | 0 | 0 |
| Trade payables | 4,020 | 3,143 | 15 | 0 | 0 | 0 | 0 | 0 |
| Provisions | 6 | 0 | 9 | 134 | 719 | 650 | 498 | 568 |
| Other payables | 7,847 | 7,744 | 2,763 | 2,778 | 1,726 | 1,734 | 0 | 0 |
| Income tax and deferred tax | 0 | 0 | 647 | 984 | 0 | 0 | 0 | 0 |
| Other debts | 0 | 0 | 760 | 0 | 0 | 841 | 0 | 0 |
| Payables to subsidiaries | 14,765 | 14,436 | 0 | 0 | 0 | 0 | 0 | 0 |
| Total | 26,789 | 25,423 | 4,195 | 3,896 | 2,445 | 3,301 | 498 | 568 |
| GROUP | ||||||||
| Prepayments from clients | 2,747 | 6,175 | 489 | 1,752 | 2,254 | 1,157 | 0 | 0 |
| Trade payables | 6,594 | 6,521 | 115 | 130 | 144 | 258 | 11 | 20 |
| Provisions | 97 | 144 | 43 | 134 | 1,271 | 1,301 | 1,906 | 2,808 |
| Other payables | 21,770 | 23,871 | 2,893 | 3,005 | 1,971 | 1,734 | 0 | 0 |
| Income tax and deferred tax | 1,906 | 2,315 | 734 | 1,507 | 213 | 115 | 0 | 0 |
| Other debts | 0 | 0 | 760 | 0 | 0 | 1,493 | 0 | 0 |
| Total | 33,114 | 39,026 | 5,034 | 6,528 | 5,853 | 6,058 | 1,917 | 2,828 |
Financial liabilities are classified as 'Financial liabilities measured at amortized cost' in the balance sheet.
Interest payments are estimated based on current market conditions.
The maturity profile of the Group's operational leasing obligations appears from note 26.
The Group is not exposed to significant risks concerning individual clients or business partners. Clients are generally major investment managers in the financial sector. Under the Group's policy for assuming credit risk all major clients and other business partners are assessed prior to any contract being signed and a substantial amount is paid on entering into license agreements.
The maximum exposure to credit risk equals the carrying amounts:
| 2013 | 2014 | 2013 | 2014 |
|---|---|---|---|
| EUR '000 | EUR '000 | EUR '000 | EUR '000 |
| 36,193 | 26,748 Cash and cash equivalents 47,106 |
37,995 | |
| 16,610 | 22,360 Receivables 49,336 |
57,994 | |
| 52,803 | 49,108 Maximum credit exposure 96,442 |
95,989 |
Financial assets are classified as 'Loans and receivables'.
Credit risk relating to cash funds comprising current account deposits and fixed term deposits is deemed to be immaterial as the accounts are held with selected recognized international banks with high credit ratings. No security has been received.
The table shows trade receivables by credit quality categorized by geographic regions:
| PARENT COMPANY | GROUP | ||
|---|---|---|---|
| 2013 | 2014 | 2013 | 2014 |
| EUR '000 | EUR '000 | EUR '000 | EUR '000 |
| 2,234 | 2,464 Europe 19,551 |
20,642 | |
| 3 | 4 North America 5,812 |
10,293 | |
| 0 | 0 Asia 241 |
645 | |
| 2 | 12 Australia 87 |
151 | |
| 0 | 0 Other 404 |
421 | |
| 2,239 | 2,480 Total | 26,095 | 32,152 |
The Group's trade receivables at 31 December 2014 include no impairments (2013: no impairments), see note 19. Impairments are based on individual assessments and result from objective indication of impairment. The impairments will be charged to administrative expenses. Maturity dates for receivables are specified in note 19. No single client represent more than 12.4% (2013: 8.5%) of total trade receivables.
The parent company and Group have the following financial instruments:
| 2013 | 2014 | 2013 | 2014 |
|---|---|---|---|
| EUR '000 | EUR '000 | EUR '000 | EUR '000 |
| 51,649 | 47,180 Loan and receivables 74,857 |
71,307 | |
| -19,399 | -18,268 Financial obligations measured at amortized cost -7,609 |
-8,409 |
No material events have occurred after 31 December 2014, that have consequences for the annual report 2014.
In May 2014, the IASB issued IFRS 15 (Revenue from Contracts with Customers). It currently awaits EU endorsement. The standard becomes effective from 1 January 2017 with earlier application permitted. Preliminary analysis of the impact of the standard on SimCorp's Consolidated Financial Statements indicates that the standard will not have significant impact on the revenue recognition.
In addition a number of other new standards and interpretations not applicable/mandatory for the preparation of the 2014 Annual Report have been published. The SimCorp Group expects to implement the new applicable and approved, not yet effective accounting standards and interpretations, as they take effect.
None of the changed standards or interpretations are expected to have any significant monetary effect on the statements of the SimCorp Group's results, assets and liabilities or the equity.
This note provides details to cashflow statement reported on page 51.
| PARENT COMPANY | GROUP | |||
|---|---|---|---|---|
| 2013 | 2014 | 2013 | 2014 | |
| EUR '000 | EUR '000 | EUR '000 | EUR '000 | |
| Adjustments | ||||
| 2,284 | 2,151 Depreciation | 2,851 | 3,780 | |
| - | - Share of profit after tax in associates | 111 | -50 | |
| -27,798 | -30,841 Financial income | -2,375 | -1,819 | |
| 2,151 | 1,257 Financial expenses | 2,494 | 1,616 | |
| 4,258 | 6,731 Tax on profit for the year | 14,670 | 15,933 | |
| 3,038 | 3,705 Adjustment sharebased remuneration | 3,038 | 3,705 | |
| -16,067 | -16,997 Total adjustments | 20,789 | 23,165 |
This note provides a reconciliation to reported segment profit from operations in note 3, Segment information.
| RECONCILIATION OF THE PROFIT BEFORE TAX EUR'000 |
||
|---|---|---|
| GROUP | 2013 | 2014 |
| Total segment profit reported (EBIT) | 54,236 | 57,263 |
| Share of profit after tax in associates | -111 | 50 |
| Financial income | 2,375 | 1,819 |
| Financial expenses | 2,494 | 1,616 |
| Profit before tax | 54,006 | 57,516 |
| 2013 | 2014 | |||||||
|---|---|---|---|---|---|---|---|---|
| Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | |
| EUR/DKK rate of exchange at end of quarter | 7.4528 | 7.4588 | 7.4580 | 7.4603 | 7.4659 | 7.4557 | 7.4580 | 7.4436 |
| Profit, EUR '000 | ||||||||
| Licenses – new sales | 2,963 | 3,997 | 3,096 | 2,140 | 1,914 | 6,017 | 3,586 | 4,294 |
| Licenses – additional sales | 2,916 | 4,568 | 7,423 | 15,157 | 1,933 | 4,333 | 3,908 | 21,687 |
| Professional services | 16,716 | 18,998 | 17,883 | 22,738 | 18,229 | 20,176 | 19,889 | 21,506 |
| Maintenance | 25,639 | 25,897 | 25,780 | 26,981 | 26,704 | 27,465 | 27,919 | 28,343 |
| Training activities etc. | 735 | 644 | 405 | 453 | 834 | 759 | 460 | 1,113 |
| Revenue | 48,969 | 54,104 | 54,587 | 67,469 | 49,614 | 58,751 | 55,762 | 76,943 |
| Costs of sales | 19,279 | 20,795 | 19,411 | 21,398 | 21,315 | 21,949 | 21,625 | 24,438 |
| Gross Profit | 29,690 | 33,309 | 35,176 | 46,071 | 28,299 | 36,802 | 34,137 | 52,504 |
| Other operating income | 3 | 3 | 29 | 17 | 5 | 36 | 105 | 30 |
| Research and development costs | 12,219 | 12,296 | 11,313 | 13,720 | 12,904 | 13,265 | 11,768 | 12,866 |
| Sales and distribution costs | 6,804 | 6,218 | 7,037 | 6,921 | 6,405 | 7,232 | 6,740 | 7,076 |
| Administrative expenses | 3,706 | 3,477 | 3,380 | 2,971 | 4,109 | 4,452 | 3,690 | 4,148 |
| Profit from operations (EBIT) | 6,964 | 11,321 | 13,475 | 22,476 | 4,886 | 11,889 | 12,044 | 28,444 |
| Financial items | 4 | -78 | -240 | 84 | 66 | -29 | 50 | 166 |
| Profit before tax | 6,968 | 11,243 | 13,235 | 22,560 | 4,952 | 11,860 | 12,094 | 28,610 |
| Tax | 1,990 | 3,351 | 3,255 | 6,074 | 1,328 | 2,740 | 3,599 | 8,266 |
| Profit for the period | 4,978 | 7,892 | 9,980 | 16,486 | 3,624 | 9,120 | 8,495 | 20,344 |
| Earnings before interest, tax, depreciation and amortization (EBITDA) |
7,768 | 12,055 | 14,226 | 23,036 | 5,496 | 12,708 | 12,875 | 29,965 |
| Balance sheet, EUR '000 | ||||||||
| Share capital | 6,045 | 5,844 | 5,844 | 5,844 | 5,844 | 5,576 | 5,575 | 5,575 |
| Equity | 71,318 | 65,722 | 65,507 | 71,566 | 47,773 | 51,376 | 58,895 | 73,380 |
| Property, plant and equipment | 4,658 | 4,429 | 4,382 | 4,839 | 5,263 | 5,411 | 5,183 | 4,635 |
| Cash and cash equivalents | 58,609 | 46,277 | 42,401 | 47,106 | 51,781 | 19,518 | 28,209 | 37,995 |
| Total assets | 120,641 | 109,245 | 108,818 | 117,469 | 127,511 | 100,736 | 112,398 | 127,807 |
| Cash flows, EUR '000 | ||||||||
| Cash flow from operating activities | 16,397 | 6,042 | 8,072 | 16,936 | 18,217 | -2,435 | 12,100 | 16,508 |
| Cash flow from investing activities, net | -188 | -489 | -1,044 | -1,122 | -7,614 | -757 | -409 | -128 |
| Cash flow from financing activities | -16,489 | -17,550 | -10,881 | -10,930 | -7,821 | -29,087 | -3,181 | -6,435 |
| Net change in cash and cash equivalents | -280 | -11,997 | -3,853 | 4,884 | 2,782 | -32,279 | 8,510 | 9,945 |
| Employees | ||||||||
| Average number of employees | 1,083 | 1,081 | 1,091 | 1,116 | 1,163 | 1,195 | 1,193 | 1,192 |
* Group quarterly data is unaudited
| 2013 | 2014 | |||||||
|---|---|---|---|---|---|---|---|---|
| Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | |
| Financial ratios | ||||||||
| EBIT margin (%) | 14.2 | 20.9 | 24.7 | 33.3 | 9.8 | 20.2 | 21.6 | 37.0 |
| ROIC (return on invested capital) (%) | 106.7 | 193.9 | 210.0 | 325.0 | 77.0 | 147.7 | 132.5 | 311.5 |
| Debtor turnover rate | 9.9 | 10.6 | 10.4 | 10.3 | 10.0 | 8.8 | 7.4 | 9.6 |
| Equity ratio (%) | 59.1 | 60.2 | 60.2 | 60.9 | 37.5 | 51.0 | 52.4 | 57.4 |
| Return on equity (%) | 22.8 | 46.1 | 60.8 | 96.0 | 24.3 | 72.9 | 61.6 | 123.0 |
| Share performance | ||||||||
| Basic earnings per share – EPS (EUR) | 0.12 | 0.19 | 0.24 | 0.40 | 0.09 | 0.22 | 0.21 | 0.89 |
| Diluted earnings per share – EPS-D (EUR) | 0.12 | 0.18 | 0.23 | 0.39 | 0.09 | 0.22 | 0.20 | 0.88 |
| Cash flow per share – CFPS (EUR) | 0.39 | 0.14 | 0.19 | 0.41 | 0.44 | -0.06 | 0.30 | 0.41 |
| Average number of shares (m) | 42.6 | 42.5 | 42.0 | 41.5 | 41.3 | 41.0 | 40.9 | 40.5 |
| Average number of shares - diluted (m) | 43.9 | 43.4 | 43.2 | 44.2 | 43.0 | 43.1 | 42.6 | 42.9 |
| Segment Data | 2013 | 2014 | ||||||
| Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | |
| Segment revenue | ||||||||
| Nordic Region | 13,950 | 15,437 | 14,067 | 18,451 | 16,058 | 16,247 | 13,574 | 19,268 |
| Central Europe | 15,456 | 16,403 | 18,681 | 22,786 | 15,557 | 16,973 | 17,384 | 23,382 |
| UK and Ireland | 6,281 | 4,117 | 6,427 | 5,834 | 3,941 | 4,243 | 4,261 | 6,594 |
| Benelux and France | 6,561 | 7,092 | 6,930 | 10,537 | 7,607 | 9,827 | 9,963 | 13,261 |
| Asia and Australia | 4,697 | 4,474 | 4,088 | 4,207 | 4,330 | 4,950 | 4,783 | 5,104 |
| North America | 8,704 | 13,828 | 10,348 | 7,586 | 6,759 | 10,986 | 9,215 | 11,617 |
| Product division | 17,204 | 15,780 | 18,230 | 22,278 | 15,191 | 18,591 | 17,303 | 28,034 |
| Coric | - | - | - | - | 437 | 2,010 | 1,890 | 1,162 |
| Corporate functions | 29 | 27 | 58 | 420 | 37 | 654 | 335 | 21 |
| Total | 72,882 | 77,158 | 78,829 | 92,099 | 69,917 | 84,481 | 78,708 | 108,443 |
| Elimination/not allocated | -23,913 | -23,054 | -24,242 | -24,630 | -20,303 | -25,730 | -22,946 | -31,500 |
| Group total revenue | 48,969 | 54,104 | 54,587 | 67,469 | 49,614 | 58,751 | 55,762 | 76,943 |
| Segment profit from operations (EBIT) | ||||||||
| Nordic Region | 2,089 | 5,731 | 2,306 | 5,587 | 3,842 | 3,580 | 3,209 | 5,624 |
| Central Europe | 2,957 | 3,207 | 4,791 | 6,741 | 2,419 | 3,446 | 4,078 | 7,030 |
| UK and Ireland | 1,510 | 59 | 1,128 | 551 | -36 | 77 | -67 | 464 |
| Benelux and France | 703 | 545 | 857 | 2,381 | 600 | 1,252 | 1,580 | 2,525 |
| Asia and Australia | 480 | 397 | 461 | 449 | 386 | 840 | 563 | 999 |
| North America | -1,081 | 1,039 | -17 | 1,166 | -1,810 | 380 | 941 | -49 |
| Product division | 1,857 | 1,433 | 4,387 | 6,432 | -294 | 2,216 | 4,523 | 13,596 |
| Coric | - | - | - | - | -118 | -455 | -252 | 5 |
| Corporate functions | -1,551 | -1,090 | -438 | -831 | -103 | 553 | -2,531 | -1088 |
| Elimination/not allocated | 0 | 0 | 0 | 0 | 0 | 0 | 0 | -662 |
| Total segment profit from operations (EBIT) | 6,964 | 11,321 | 13,475 | 22,476 | 4,886 | 11,889 | 12,044 | 28,444 |
* Group quarterly data is unaudited
SimCorp Dimension is a portfolio of integrated front-to-back solutions for business process automation in investment management that adds value through mitigating risk, reducing costs, and enabling growth.
SimCorp Dimension is the most comprehensive state-ofthe-art investment management system on the market today. Built on a truly integrated platform and one single database, it offers automated processing solutions that eliminate the need for middleware and the costs that come with it. Completely modular, the system can be configured
precisely for your functional needs, compliance demands, and instrument-handling requirements. Highly flexible and scalable, it also allows you to grow and act efficiently on business opportunities as new functions or financial instruments are easily integrated.
SimCorp Coric is an advanced client communication reporting solution for wealth managers, institutional asset management firms, third party adminstrators and global custodians.
SimCorp Coric is a platform for multi-award-winning client communications and online reporting solutions. The solutions empower client services teams and relationship managers to enhance client servicing and enrich the client experience, while at the same time reducing operational risk and reducing costs. As a result, relationship managers can spend more
time with clients than they do generating client reports, quarterly investment reviews, pitchbooks, client meeting packs, fund fact sheets, and other client communications. SimCorp Coric is system-independent, integrates seamlessly with any investment management platform, and enables clients to extract data from any source.
As a specialized financial software and services provider, highly skilled and satisfied employees are paramount to SimCorp's success. Most of SimCorp's employees are experts within finance, IT, engineering, or economics.
1,224 employees from 50countries
SimCorp A/S Weidekampsgade 16 2300 Copenhagen S Denmark Phone +45 35 44 88 00 Fax +45 35 44 88 11 [email protected] www.simcorp.com Company reg. no: 15505281
Since 1971, SimCorp has been providing investment and portfolio management software and services to the world's leading investment managers, asset managers, fund managers, fund administrators, pension funds, insurance funds, and wealth managers. Based on its world-class software platforms, SimCorp Dimension and SimCorp Coric, SimCorp provides global financial organizations with the tools they need to mitigate risk, reduce cost, and enable growth. Listed on the NASDAQ OMX Copenhagen, SimCorp is a global company, regionally covering all of Europe, North America, and Asia Pacific. For more information, please visit www.simcorp.com. simcorp.com
Building tools?
Free accounts include 100 API calls/year for testing.
Have a question? We'll get back to you promptly.