Annual Report • Feb 27, 2013
Annual Report
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Earnings and cash flow per share of DKK 10 each Earnings per share Cash flow per share
SimCorp develops, sells and provides software solutions and related services to the international financial industry. SimCorp's product, SimCorp Dimension, is an advanced solution for professional investment managers comprising 15 individual business solutions that each supports a specific part of the investment management value chain.
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.
SimCorp's clients include financial institutions, asset and fund managers, insurance companies, pension funds, mutual funds, banks and mortgage lenders across the world.
SimCorp is listed on NASDAQ OMX Copenhagen A/S, where it is part of the index for medium-sized companies (OMX Nordic Mid Cap). SimCorp's share capital amounts to nominal DKK 45,000,000 divided into 45,000,000 shares of DKK 1 each. Each share carries one vote, and all shares are freely transferable. All shares confer equal rights on their holders.
SimCorp is the most attractive partner to investment managers and the number one provider of investment management solutions globally.
SimCorp powers successful investment management companies globally by offering integrated solutions unrivalled at reducing cost, mitigating risk and enabling growth associated with investment activities.
SimCorp is pursuing a consistent and long-term strategy that gradually unfolds the Group's potential over the years. Focus is on further building its position in North America, while nurturing existing markets primarily in Europe. Through continuous investment in its solutions and services, SimCorp consistently enhances its offerings to meet the demands of the industry, and as satisfied and referential clients are the best foundation for further growth, SimCorp continues to focus on maintaining and growing client loyalty.
SimCorp's core strengths include its in-depth financial expertise, comprehensive yet modular standard solutions and services, skilled and dedicated employees as well as a large and prestigious client base.
The market for investment management solutions in which SimCorp competes is significantly impacted by the greater macroeconomic trends. Volatility and lack of overview and visibility into processes and activities have thrown the industry into the worst crisis since the Great Depression. An abundance of legislative initiatives is being introduced to increase control and supervision, and financial institutions are increasingly looking for ways to cut costs, minimize risk and scale for growth.
The prospects of a full recovery of the financial industry are still a long time coming, and this drives a number of technological requirements and hence what is required from a solutions and services vendor such as SimCorp. Based on market research and close collaboration with clients in the industry, SimCorp believes that client focus in 2013 and beyond will be on regulatory compliance, further automation of processes to reduce operational costs, and data management to mitigate risks across all the elements of the investment management process. Greater structural changes, such as consolidation, are also likely to shape the industry.
SimCorp is a global company, regionally covering Europe, North America and Asia Pacific.
5 SimCorp posted EBIT of EUR 46.9m (DKK 351m), an increase of EUR 0.6m relative to 2011. The EBIT margin was 22.4%. The profit for the year was EUR 34.5m, and the Board of Directors intends to recommend to the shareholders at the annual general meeting that dividends be paid to shareholders at the rate of DKK 35.00 per share of DKK 10 each.
7%
SimCorp generated revenue of EUR 209.2m (DKK 1.56bn) in 2012, an increase of EUR 14.4m or 7% compared with last year.
The order inflow – representing the licence value of new orders plus the licence value of add-on licences to customers was EUR 49.4m compared to EUR 40.4m in 2011.
Income recognised from new licences and addon licences amounted to EUR 42.4m, a decrease of 10% relative to 2011.
15% Overall business growth measured as total revenue growth plus net growth in the licence order book totalled 15% in 2012.
The expansion of SimCorp's activities in North America continued throughout 2012, and business with existing clients increased. SimCorp won five new licence agreements in North America.
125%
SimCorp purchased treasury shares for EUR 25.5m in 2012 compared to EUR 13.2m in 2011. Combined with the dividend paid in 2012 of EUR 17.2m SimCorp returned more than 125% in combined payout ratio to its shareholders in 2012.
In 2012 SimCorp continued to grow and generated revenue of EUR 209.2m – an improvement of 7.4% compared with 2011. We strengthened our foothold in the North American market and continued to increase our market share in a number of European markets. Given the challenging market conditions, the 2012 business results are satisfactory – and SimCorp remains confident about the future.
2012 picked up where we left 2011; volatile market conditions and sustained uncertainty about the future. Still, when embarking on 2012 we were anticipating a slow but growing long-term confidence in the financial institutions with, however modest, increases in IT budgets and improved sentiment to invest in technology. Unfortunately, this has not entirely been the case. The market has not recovered significantly and hesitation is still prevalent. This apprehension is particularly evident in the buying pattern of financial institutions, who postpone or simply cancel otherwise planned investments in new technology.
Not surprisingly, this situation affects everyone in the industry, including SimCorp. However, while market conditions were challenging, SimCorp still completed nine new contracts in 2012 – five of them in one of our dedicated growth markets, North America. We are particularly pleased to see that our efforts in North America are now beginning to pay off, leading to our continued investment and focus on the future in the region. In Europe, where market conditions have been more challenging during 2012, we managed to maintain and in some markets improve our market share. As was the case last year, existing clients were reluctant to purchase
extra licenses, and the total order inflow from existing clients stood at a modest EUR 28m in 2012.
Our business model continues to demonstrate its robustness – as it has since the financial crisis broke out in 2008. The larger part of our revenue is derived from maintenance fees and professional service activities. This makes SimCorp less vulnerable to fluctuations in new sales and we have thus been able to weather the challenging market conditions and continue to generate growth. Our growth rate is not as high as we would have wished, still we maintain focus on our long-term strategy, which has proven its resilience and value for many years. Our business performance also benefits our investors, and with an operating cash flow of EUR 47m and a strong balance sheet, we are proposing a 17% increase in dividend per share to DKK 35 of DKK 10 each to be paid to our shareholders, while still maintaining an equity ratio of 68%. Further, in 2012 SimCorp continued its share buyback program and bought back treasury shares for EUR 25.5m.
Staying ahead in the software business is dependent on constant investment in R&D, and SimCorp is one of few independent software companies that continues to invest
Klaus Holse, Chief Executive Officer
substantial resources in R&D. By comparison the software of several of our competitors is becoming legacy because the necessary investments are not being made unless clients specifically pay for upgrades and new development. Our focus and investment in R&D means that we provide two software releases each year; a practice we have adhered to for more than a decade, and it is our guarantee that our clients are always working on an updated and modern platform that is compliant with the demands of the industry. Further, in 2012, SimCorp repackaged its software, and now offers a portfolio of solutions that individually can meet the current demands of any part of our clients' value chain – or when combined provide an enterprise solution. This repackaged offering provides our clients increased value and allows them to efficiently manage their business processes, either enterprise-wide or in select parts of the business, with bestof-breed functionality.
Organizationally, 2012 was a year of change for SimCorp. SimCorp's CEO of the past 12 years, Peter L. Ravn, decided to retire after 26 years with SimCorp, and in a very smooth and well-planned transition, I took over on September 1. I want to extend my sincere gratitude to Peter for handing over a very sound and healthy company that I look forward to taking into the next era. Following the transition we have adjusted the
management and organizational structure, strengthening our ability to realize our vision of becoming "the most attractive partner to investment managers and the number one provider of investment management solutions globally."
Going into 2013 we expect the global financial crisis to continue to affect our industry. However, our strengthened position particularly in the North American growth market gives us confidence in our continued and sustained growth. We will maintain our approach to balancing profitability with investment in strategic initiatives and continuously strive for sustained excellence in meeting the demands of our clients by means of modern solutions and services as well as exceptional industry expertise.
I want to thank SimCorp's employees in particular for their unwavering commitment to the company and to servicing our clients. I would also like to express my gratitude to all of SimCorp's stakeholders for their cooperation and support. I believe SimCorp stands well prepared to meet the future and I look forward to continuing our good relationship.
Klaus Holse, Chief Executive Officer
| 2008 | 2009 | 2010 | 2011 | 2012 | |
|---|---|---|---|---|---|
| EUR/DKK rate of exchange at December 31 | 7.4506 | 7.4415 | 7.4544 | 7.4342 | 7.4604 |
| Profit, EUR'000 | |||||
| Revenue | 174,737 | 180,375 | 185,375 | 194,815 | 209,190 |
| Earnings before interest, tax, depreciation | 41,776 | 44,147 | 39,923 | 50,399 | 50,650 |
| and amortization (EBITDA) | |||||
| Profit from operations (EBIT) | 38,432 | 39,670 | 35,199 | 46,340 | 46,915 |
| Financial items | 4,124 | 11 | (1,962) | 833 | 81 |
| Profit before tax, continuing operations | 42,556 | 39,681 | 33,237 | 47,173 | 46,996 |
| Profit for the year, continuing operations | 31,510 | 26,729 | 24,390 | 33,956 | 34,474 |
| Profit for the year, discontinued operations | (351) | 196 | 0 | 0 | 0 |
| Profit for the year | 31,159 | 26,925 | 24,390 | 33,956 | 34,474 |
| Total comprehensive income for the year | 26,218 | 28,488 | 26,817 | 34,384 | 34,291 |
| Balance sheet, EUR'000 | |||||
| Share capital | 6,616 | 6,179 | 6,179 | 6,179 | 6,045 |
| Equity | 62,699 | 75,654 | 77,520 | 83,184 | 85,864 |
| Property, plant and equipment | 10,898 | 9,341 | 8,779 | 7,813 | 5,213 |
| Cash and cash equivalents | 25,463 | 44,305 | 42,689 | 48,149 | 58,897 |
| Total assets | 96,463 | 116,390 | 113,011 | 119,478 | 125,791 |
| Cash flows, EUR'000 | |||||
| Cash flow from operating activities, continuing operations | 27,154 | 37,006 | 28,513 | 38,396 | 46,665 |
| Cash flow from investing activities | (7,333) | (1,025) | (2,945) | (2,878) | (766) |
| Cash flow from financing activities | (14,056) | (17,391) | (27,528) | (30,044) | (35,362) |
| Net change in cash and cash equivalents | 5,765 | 18,590 | (1,960) | 5,474 | 10,537 |
| Employees | |||||
| Average number of employees, continuing operations | 949 | 1,045 | 1,077 | 1,048 | 1,075 |
| Profit, DKK'000 | |||||
| Revenue | 1,301,899 | 1,342,261 | 1,381,859 | 1,448,294 | 1,560,641 |
| Earnings before interest, tax, depreciation | 311,259 | 328,520 | 297,602 | 374,676 | 377,869 |
| and amortization (EBITDA) | |||||
| Profit from operations (EBIT) | 286,341 | 295,204 | 262,387 | 344,501 | 350,005 |
| Financial items | 30,724 | 82 | (14,626) | 6,193 | 604 |
| Profit before tax, continuing operations | 317,065 | 295,286 | 247,763 | 350,694 | 350,609 |
| Profit for the year, continuing operations | 234,768 | 198,904 | 181,813 | 252,436 | 257,190 |
| Profit for the year, discontinued operations | (2,615) | 1,459 | 0 | 0 | 0 |
| Profit for the year Total comprehensive income for the year |
232,153 195,340 |
200,363 211,993 |
181,813 199,905 |
252,436 255,618 |
257,190 255,825 |
| Balance sheet, DKK'000 | |||||
| Share capital | 49,250 | 46,000 | 46,000 | 46,000 | 45,000 |
| Equity | 467,146 | 562,979 | 577,865 | 618,406 | 640,580 |
| Property, plant and equipment | 81,200 | 69,511 | 65,442 | 58,083 | 38,891 |
| Cash and cash equivalents | 189,711 | 329,696 | 318,221 | 357,949 | 439,395 |
| Total assets | 718,709 | 866,116 | 842,429 | 888,223 | 938,451 |
| Cash flows, DKK'000 | |||||
| Cash flow from operating activities, continuing operations | 202,314 | 275,380 | 212,547 | 285,444 | 348,140 |
| Cash flow from investing activities | (54,633) | (7,628) | (21,953) | (21,396) | (5,715) |
| Cash flow from financing activities | (104,729) | (129,415) | (205,205) | (223,353) | (263,815) |
| Net change in cash and cash equivalents | 42,953 | 138,337 | (14,611) | 40,695 | 78,610 |
| Key ratios | |||||
| EBIT margin (%) | 22.0 | 22.0 | 19.0 | 23.8 | 22.4 |
| ROIC (return on invested capital) (%) | 96.2 | 89.9 | 79.0 | 108.8 | 124.0 |
| Debtor turnover rate | 7.4 | 7.0 | 6.1 | 7.1 | 7.8 |
| Equity ratio (%) | 65.0 | 65.0 | 68.3 | 69.6 | 68.3 |
| Return on equity (%) | 42.8 | 36.3 | 30.0 | 40.0 | 38.7 |
The key ratios have been calculated in accordance with IAS 33 and 'Recommendations and Ratios 2010' issued by the Danish Financial Analyst Association
Cash flow from operating activities
Net revenue per quarter
Earnings and profitability
| 2008 | 2009 | 2010 | 2011 | 2012 | |
|---|---|---|---|---|---|
| Per share data | |||||
| Basic earnings per share of 1 DKK – EPS (EUR) | 0.68 | 0.60 | 0.54 | 0.77 | 0.80 |
| Diluted earnings per share of 1 DKK – EPS-D (EUR) | 0.68 | 0.59 | 0.54 | 0.76 | 0.79 |
| Basic earnings per share of 1 DKK, | 0.69 | 0.59 | 0.54 | 0.77 | 0.80 |
| continuing operations – EPS (EUR) | |||||
| Diluted earnings per share of 1 DKK, | 0.69 | 0.59 | 0.54 | 0.76 | 0.79 |
| continuing operations – EPS-D (EUR) | |||||
| Cash flow per share of 1 DKK – CFPS (EUR) | 0.59 | 0.82 | 0.63 | 0.87 | 1.08 |
| Average number of shares of DKK 1 | 45,950,030 | 45,123,595 | 44,998,925 | 44,107,079 | 43,079,567 |
The uncertainty in the financial markets experienced in 2010 and 2011 to a certain extent prevailed in 2012. But where the uncertainty in 2011 had a global character, particularly the North American market showed improvement in 2012 impacting SimCorp positively.
The level of new license contracts entered into in 2012 in North America fuelled the Group's total order inflow to an increase of more than 21% to EUR 49m. Not all orders entered into have been income recognized in 2012 and hence the order book increased by 78% to EUR 14.4m. Despite the impact on earnings from the build-up of the order book SimCorp's focus on internal efficiencies let the Group to exceed the minimum earnings guidance slightly, yielding EBIT of EUR 46.9m corresponding to an EBIT margin of 22.4% compared to 23.8% in 2011.
As outlined in the 2011 annual report, SimCorp's business development in 2012 focused primarily on profitable growth and increased efficiency gains based on the following specific operational targets:
Despite difficult market conditions for financial software product suppliers globally, SimCorp continued to see demand for its solutions in 2012, resulting in a total order inflow of EUR 49m, comprising nine new license agreements and add-on license agreements with around 100 clients.
In 2012 the main growth driver for SimCorp was the North American market where SimCorp succeeded in securing five new license deals with highly respected investment management companies covering different sub segments. The success in North America is a result of the continued focus on the North American market that SimCorp has pursued the last couple of years. Sustained marketing activities during the year increased the awareness of SimCorp in North America significantly. Whereas new sales were positive in the North American market, SimCorp experienced difficulties in securing new orders in the remaining two growth markets – France and the UK where no new license contracts were made during 2012. Both markets – as the rest of Europe – suffered difficult macroeconomic conditions in 2012, which has led potential clients to postpone further investment decisions.
Whereas the designated European growth markets hence disappointed, SimCorp secured three new license agreements elsewhere in Europe – two in Switzerland and one in another Western European country. This expands SimCorp's market leading position in Europe further. Finally, a new license agreement was made towards the end of the year with an Asian-based sovereign wealth fund – the first new license agreement in the Asian region since 2010.
While the order inflow for new license agreements was significantly above the level of 2011 and impacted total order inflow positively the order inflow for add-on licenses was
as challenging as in 2011. The conversion rate of add-on licenses as a percentage of the installed license base continued to fall from the already low level of 6.7% in 2011 to 5.6% in 2012. Like in 2011, the lower conversion rate was a result of limited M&A transactions by SimCorp's clients, a reduced need for additional users and the impact of the "like-for-like conversion campaign" migrating clients from their existing SimCorp Dimension Front Office solution onto the new SimCorp Dimension Front Office solution.
During 2012 SimCorp saw a change in market demand for SaaS solutions. As a consequence, SimCorp decided to postpone providing a conventional SaaS solution, whereas SimCorp still maintains focus on providing managed services and other packaged solutions for its clients.
Internally, SimCorp maintained sustained focus on improving efficiency which led to improved development capacity, despite reducing R&D staff year-end 2012 by 18 persons compared with 2011.
Overall, SimCorp remains competitive in the market and continues to gain market share in the geographies in which it operates, which the achievements during the year clearly support:
SimCorp's French subsidiary continued its market activities and gained increased momentum in the French market during the year, although the increased activity level did not result in any new clients in 2012
SimCorp's UK subsidiary did not sign any new license agreements during 2012, but it expanded the relationship with a UK based asset manager considerably resulting in a significant add-on order in 2012
The 2011 annual report set out revenue and profit guidance for 2012. The guidance predicted revenue and overall business growth in local currencies of more than 5% in local currencies and an EBIT margin above 22%.
Revenue per market unit: SimCorp generated total revenue of EUR 209.2m in 2012
SimCorp ended the year with revenue growth of 7.4% (4.5% in local currencies) and an EBIT margin of 22.4% compared to last year when revenue grew by 5.1% (4.6% in local currencies) and EBIT was 23.8%. Further SimCorp grew the order book during 2012 by EUR 6.3m compared to the end of 2011 to be EUR 14.4m at the end of 2012.
SimCorp considers the performance satisfactory given that total business growth for the year – revenue growth including the changes to the order book value – was 14.6% compared to 1.0% in 2011, and takes comfort in the revenue growth rates and EBIT performance achieved for 2012 being in line with the guidance for the year, while at the same time increasing the value of the order book by EUR 6.3m.
SimCorp generated total revenue of EUR 209.2m in 2012 compared to EUR 194.8m last year, equal to an increase of 7.4% over 2011. Exchange rate fluctuations for the year had a positive impact of EUR 5.7m on revenue, equal to 2.9%. SimCorp derives revenue from three sources: license fees; fees from professional services; and maintenance income.
The total license order inflow increased by 21% to EUR 49.1m of which the nine new SimCorp Dimension solutions sold in 2012 totalled EUR 20.6m. The order book increased from EUR 8.1m at January 1, 2012 to EUR 14.4m at January 1, 2013. SimCorp enters 2013 with a significantly higher level of signed revenue for the full year than ever before totalling EUR 150m – an increase of EUR 16m compared to the yearearlier date.
SimCorp's total license fee revenue in 2012 was EUR 42.4m, which was 10% lower than last year. The decline was caused by the deferral of income recognition on some of the new license agreements entered into during the year and a lower conversion ratio for the sale of add-on licenses throughout the year. In total, license fee revenue accounted for 20% of the Group's total revenue compared with 24% last year and was lower than the indications at the beginning of the year of 25–30%. Revenue recognised from sale of initial licenses accounted for EUR 14.8m compared with EUR 16.9m in 2011. Revenue recognised from add-on licenses to clients accounted for EUR 27.6m compared with EUR 30.3m last year. The conversion ratio of add-on license revenue compared to the value of the installed license base fell from 6.7% in 2011 to 5.6% in 2012.
| Costs 2012 (EURm) |
Share of consoli dated costs 2012 |
Share of revenue 2012 |
Change relative to 2011 |
|
|---|---|---|---|---|
| Sales and distributions costs |
27.3 | 17% | 13% | 12% |
| Cost of sales | 76.6 | 47% | 37% | 15% |
| Research and | 45.6 | 28% | 22% | 3% |
| development costs | ||||
| Administrative expenses | 13.0 | 9% | 6% | (1)% |
| Total | 162.5 | 100% | 78% | 9% |
"SimCorp generated total revenue of EUR 209.2m in 2012 compared to EUR 194.8m last year, equal to an increase of 7.4% over 2011."
Around 100 clients have expanded their use of SimCorp Dimension during 2012. This includes the 15 largest clients who on average generated add-on license revenue worth EUR 1.0m each – an increase from last year's level at EUR 0.7m. SimCorp's existing clients made additional investments in SimCorp Dimension in 2012, and the proportion of clients with a license base of more than EUR 2m was unchanged at 55% at December 31, 2012. Clients with an installed license base of more than EUR 2m accounted for 86% of the license base, the same level as last year. The license base is the contract value of all software licenses sold.
Around 24% of SimCorp's total revenue was generated by the ten largest clients which is a decrease from last year's level of 28%, yet still no single client accounted for more than 4% of revenue.
Fees from professional services stood at EUR 66.1m compared to EUR 57m in 2011, equal to a 16.0% increase. Fees from professional services accounted for 32% of total revenue in 2012 compared with 29% in 2011, slightly above the range of 25–30% that was indicated at the beginning of the year.
Maintenance income continues to increase with the completion and implementation of new client installations and new functionality to existing clients, and increased by 10.7% over last year's EUR 88.6m to stand at EUR 98.1m. Maintenance income accounted for 47% of consolidated revenue compared with 45% in 2011, slightly above the indications at the beginning of the year of 45%. On full installation and implementation at clients' premises, license agreements won in 2012 will increase annual maintenance income by around EUR 10m.
SimCorp's total operating expenses (including amortization and depreciation) increased by 9% to EUR 162.5m in 2012 compared with EUR 148.7m in 2011. EUR 3.6m of the increase in costs can be attributed to changes in currency exchange rates corresponding to 2 percentage points.
In 2012, around 75% of SimCorp's total costs were directly related to employees compared with 72% in 2011. The cost increase in 2012 was driven by a 3% increase in the number of average full-time employees in SimCorp, and an average salary increase of 2.5%. Costs also include commission on orders, which will be income recognized in later years.
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 that SimCorp saw in 2011, which continued throughout 2012, total cost of sales increased by 15%. Cost of sales also includes costs related to the SaaS initiative that was postponed. Of the total 15% increase in cost of sales around 3 percentage points can be attributed to this initiative.
"SimCorp purchased 177,017 treasury shares with a nominal value of DKK 10 each in 2012 at an average price of DKK 1,075.48 per share of DKK 10."
R&D costs increased moderately by 3.2% from EUR 44.2m to EUR 45.6m. 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 further increased in 2012 in order to enhance efforts particularly in North America where dedicated sales resources have been hired. For the more established markets additional focus has been put on the ongoing marketing efforts to safeguard SimCorp's market leading position. SimCorp's total sales and distribution costs increased by 12% from EUR 24.5m to EUR 27.3m in 2012.
Administrative expenses decreased by 1.4% to EUR 13.0m.
SimCorp generated EBIT of EUR 46.9m in 2012 compared with EUR 46.3m in 2011, an increase of EUR 0.6m while at the same time the value of the order book increased by EUR 6.3m. As a result of the build-up of the order book the EBIT margin decreased to 22.4% compared with 23.8% 2011. Exchange rate fluctuations for the year had a positive net impact of 0.4 percentage point on the EBIT margin.
Cash holdings and foreign exchange adjustments generated financial income of EUR 2.0m. Financial expenses, primarily relating to foreign exchange adjustments, amounted to EUR 2.1m. Continuing operations thus generated a pre-tax profit for the year of EUR 47.0m against EUR 47.2m in 2011.
The tax charge for 2012 amounted to EUR 12.5m against EUR 13.2m in 2011. The effective tax rate was 26.6% compared to 28.0% in 2011.
The consolidated profit for the year was thus EUR 34.5m against EUR 34.0m in 2011. After foreign currency translation differences and other items of EUR 0.2m, total comprehensive income for the year amounted to EUR 34.3m against EUR 34.4m in 2011.
SimCorp had total assets of EUR 125.8m at December 31, 2012 compared with total assets of EUR 119.5m at December 31, 2011. Cash holdings amounted to EUR 58.9m, or EUR 10.7m more than at the year-earlier date. Total receivables stood at EUR 46.1m at 31 December 2012 against EUR 47.8m at December 31, 2011. SimCorp has not made any provision for bad debt in 2012 and 2011.
The Group's non-current assets decreased by EUR 1.1m to EUR 15.9m in 2012. Goodwill was EUR 0.9m at December 31, 2012. The carrying amount of acquired software decreased from EUR 1.1m to EUR 0.6m, while deferred tax increased by EUR 1.8m to EUR 5.7m. Property, plant and equipment stood at EUR 5.2m against EUR 7.8m in 2011 after relatively modest investments in technical equipment.
The Group's equity increased during the year from EUR 83.2m to EUR 85.9m. Comprehensive income amounted to EUR 34.3m against EUR 34.4m last year and the net effect of the sale of employee shares and share-based payment related to options of EUR 11.1m compared with EUR 2.3m in 2011 increased equity. Dividend payments of EUR 17.2m against EUR 17.8m last year and purchases of treasury shares of EUR 25.5m against EUR 13.2m in 2011 reduced equity by EUR 42.7m compared with EUR 31.0m in 2011.
"After two years in production, the investment operations team has greatly benefited from the operational efficiency SimCorp offers, however, the real winners are our portfolio managers who are confident they have a system in the back office that will support any new client or product they bring to the table."
— Merele May, Senior Vice President, Investment Operations at American Century Investments
Operating activities generated a net cash inflow of EUR 46.7m against EUR 38.4m last year, and there was a net cash outflow of EUR 0.8m from investing activities compared with EUR 2.9m in 2011. SimCorp thus generated a net cash inflow from operations of EUR 45.9m against EUR 35.5m in 2011.
The Group's investing activities, primarily in improved technological infrastructure, comprised purchases of intangible assets of EUR 0.2m; computing and communication equipment (technical equipment) of EUR 0.6m.
SimCorp purchased 177,017 treasury shares with a nominal value of DKK 10 each in 2012 at an average price of DKK 1,075.48 per share of DKK 10. SimCorp sold 14,241 treasury shares with a nominal value of DKK 10 each with a total market value of EUR 1.6m as part of the year's employee share program and delivered 63,630 treasury shares with a nominal value of DKK 10 with a total market value of EUR 9.8m each in connection with the exercise of stock options by employees and members of the Executive Management Board and remuneration of the Board of Directors in accordance with a resolution adopted by the shareholders in general meeting.
At December 31, 2012, SimCorp held 244,402 treasury shares with a nominal value of DKK 10 each (5.4% of the total share capital) at an acquisition value of EUR 33.4m and a market value of EUR 41.4m at 31 December 2012. At December 31 2011 SimCorp held 245,256 treasury shares with a nominal value of DKK 10 each (5,3% of total share capital) and at an acquisition value of EUR 27.4m and a market value of EUR 28.9m.
"At December 31, 2012, SimCorp held 244,402 treasury shares with a nominal value of DKK 10 each."
In 2012, the parent company generated revenue of EUR 90.9m, an increase of EUR 8.5m compared with 2011. The parent company received dividends totaling EUR 24.4m from subsidiaries in 2012 compared with EUR 24.3m in 2011. Profit after tax for the year was EUR 35.2m against EUR 32.2m in 2011. Equity increased by EUR 3.3m to EUR 71.6m including
share capital of EUR 6.0m, retained earnings of EUR 45.6m and a proposed dividend of EUR 20.0m.
The Board of Directors intends to recommend to shareholders at the annual general meeting that, out of the total recognized comprehensive income of EUR 34.9m, dividends of EUR 20.0m be declared, representing DKK 35.00 per share of DKK 10, and that EUR 14.9m be transferred to retained earnings.
No significant events have occurred after the balance sheet date that affect the 2012 annual report.
Reinforcing SimCorp's profile as a growth company remains a strategic priority. Focus continues to be on sustained profitable growth as a key element of the targets for 2013 and beyond. Clearly defined targets and prospects steer SimCorp in the right direction towards realizing its vision.
Based on the three cornerstones of its business; compelling solutions and services, loyal clients and highly skilled employees, SimCorp is determined to continue to grow. While the market for investment management solutions, in which SimCorp competes, is greatly impacted by the global macroeconomic conditions, SimCorp sees a number of governing trends that influence the market potential for SimCorp's business.
Overall, the ultimate goal for any investment manager is to secure profitable growth – for the investors and for the fund manager. Drivers for a higher return include risk mitigation and cost reduction as well as a system platform that easily and flexibly allows for growth based on a technologically modern platform. On this assumption, SimCorp aims strategically and practically at these drivers in order to provide value-adding benefits for its clients.
Risk management is probably the area that has gained the most attention in the wake of the financial crisis. Demands for greater transparency and visibility into processes and practices arise from both public and private institutions in the form of legislation and increased corporate governance. Further to that, clear and transparent risk analysis is now considered a competitive advantage in the investment management business.
The prospects of prolonged and sustained volatility, continued uncertainty in financial markets as well as the accelerating flow of new legislative demands are bound to drive a number of technological requirements and hence demands on solutions providers such as SimCorp. Investment managers need to invest in IT in order to effectively manage risk; not only operational risk, but also – and perhaps more importantly – reputational risk. Having the right IT solutions is essential in a market where trustworthy reputation and confidence are key to investors.
Clients operating on a SimCorp Dimension solution are supported throughout the entire value chain in mitigating operational risk and complying with new and existing regulatory demands. On a single, integrated platform with highly automated STP (straight-through-processing) from front-to-back across the entire enterprise, operational risk is significantly reduced. Due to SimCorp Dimension's extensive reporting capabilities, data can quickly be transformed into rich information for not only regulators, but also clients' management and operations control functions, allowing SimCorp's clients to meet legislative demands and significantly minimize risk.
Global asset management company DIAM International, with more than USD 120 billion of assets under management, is one of the companies that has reduced risk through the use of SimCorp Dimension. With a clear system architecture based upon SimCorp Dimension throughout the business DIAM has reduced its business risk profile with regards to client mandates.
"We're confident we'll be able to adapt to changing requirements of our clients, no matter how demanding they might be."
Jan Weber, Chief Operating Officer at DIAM International
Further, improvements in DIAM's front office capabilities have also resulted in higher dealing efficiency and better compliance monitoring.
While risk mitigation – as a result of the financial crisis – has gained renewed focus over the past years, cost consciousness has always been a priority in a market determined to improve profit margins on an on-going basis. Today, investment managers are not only faced with the pains of continuously reducing their operating costs, they are also experiencing shrinking fees and higher trading costs, just as complying with the regulatory demands is a costly challenge.
As a result of this, many firms are now looking for new ways to reduce costs – and for many this means they have to adopt new IT concepts and thoroughly consider how to cope with present and future legislative requirements in the most
cost-effective way. Investment in new technology is likely to be part of their considerations.
SimCorp offers its clients a single, integrated investment management solution that fully eliminates the need for middleware and the inherent integration challenges that come from a 'best-of-breed' approach. Based on a single database, SimCorp Dimension allows clients to access data that is continually updated in real time. Moreover, STP offers continuous process improvements and workflow automation, which is not only cost efficient but also mitigates risk. Further, SimCorp's business services include customized business consulting as well as pre-packaged regulatory compliance services that permit clients to benefit from SimCorp's knowledge and expertise and allow them to focus on their key competences and tasks.
One of SimCorp's clients that has benefitted from moving to SimCorp Dimension is Challenger Limited, an investment management company founded in 1985 and listed on the Australian Securities Exchange. Since implementing SimCorp Dimension, Challenger has reported significant productivity benefits and estimates that automated unit pricing will save around 4,000 hours annually.
"SimCorp Dimension helped us achieve a more than 50% reduction in error rates, while reducing our cost-to-income ratio to about 37%."
David Mackaway, Challenger Financial Services Group
In addition to the cost-savings, Challenger's reporting and compliance operations are now facilitated from a central data repository, thus eliminating data integration issues and further reducing operational risk. Challenger has accomplished a compound annual growth rate of around 20% for the past five years.
Certainly the ability to scale and grow one's business is paramount to any investment manager. A current, important growth factor is the changing demographics – in particular the aging population – which is bound to play a significant role in the future of all sectors within the investment management industry. Demographic changes will pose both challenges and opportunities; the pensions industry, for instance, will in general be expected to provide very high returns as well as stable cash flows while simultaneously being able to manage risk better. The fund industry will be met with a growing demand for products suited for retirement savings.
In addition, investment managers are looking towards emerging markets as a growth opportunity, while at the same time facing the challenge from declining investor trust. In fact, research indicates that the opportunity to grow lies with those industry players that are most able to meet the challenge of providing transparency to their clients and other stakeholders, not least the regulators.
The abovementioned aspects all require a solid IT infrastructure to not only manage the challenges but also cater for the opportunities. More than ever, in order to drive business performance and regain the market's confidence, the industry must focus attention on IT infrastructure as a significant driver. As a provider of preeminent investment management solutions, SimCorp provides the basis of its clients' business.
French asset manager, Edmond de Rothschild is one of SimCorp's clients that has grown its business since the implementation of SimCorp Dimension:
"The modular structure of the software system allows the company to very rapidly adapt the tool to new client
demands, specific investment issues in product innovation and particular client or regulatory constraints in certain countries. ... SimCorp was a key factor in our ability to almost double assets under management from €7 billion to current levels around €13 billion."
Philippe Couvrecelle, Chairman of the Executive Board of Edmond de Rothschild Asset Management
With the right, flexible and scalable IT platform in place, the company is able to grow through structured international development and safe development of investment management techniques. Further, it provides a risk control system that is among the most sophisticated in the industry.
Despite the many challenges and opportunities, a significant number of investment managers are still operating on old and out-dated system platforms. These so-called legacy systems are characterized by often being based on old databases, the need to store the same data in duplicate systems, reliance on spreadsheets and other manual processing to compensate for system deficiencies, infrequent software updates and new releases, sometimes internally developed, and in general a system that is ill-equipped to deal with the current and expected pace of change in client demand and regulation-driven adjustments to existing industry paradigms and best practice.
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. This means that SimCorp's solution, SimCorp Dimension, is released in a new and updated version every six months. Just as it has been for the past decade. It is a strategic decision to continuously invest in the further development and improvement of SimCorp's solutions and services for the benefit of its clients. It is in fact a perennial guarantee that SimCorp clients will never operate on an out-dated solution. Over the past three years, SimCorp Dimension has replaced a legacy system in every single new business case the company has had.
Headquartered in Kansas City, Missouri, American Century Investments is one of the firms that has replaced a legacy accounting platform with SimCorp Dimension to support expansion of the firm's institutional and international business.
"SimCorp Dimension helped us achieve a more than 50% reduction in error rates, while reducing our cost-to-income ratio to about 37%"
— David Mackaway, Challenger Financial Services Group
American Century Investments has realized numerous benefits from implementing SimCorp Dimension, including support of the firm's investment strategy, which has resulted in growth of assets under management from USD 88 to USD 118 billion.
"After two years in production, the investment operations team has greatly benefited from the operational efficiency SimCorp offers, however, the real winners are our portfolio managers who are confident they have a system in the back office that will support any new client or product they bring to the table."
Merele May, Senior Vice President, Investment Operations at American Century Investments
Further, American Century Investments has gained reduction in time to market for new securities as well as the ability to manage 286 portfolios with a lean team of five accountants and a manager. Further, they now have a centralized position-keeping that provides a single authoritative source of data for accurate positions, cash projections, performance calculations and reporting. The firm is consolidating all position data in SimCorp Dimension and uses the platform's integrated functionality for portfolio accounting, performance measurement and client reporting.
In today's market, and more importantly, in tomorrow's market, the survivors will be those investment managers who have adopted a modern and forward-looking investment management solution that is able to support the business needs; not only from a technical viewpoint, but also from a business perspective. Investment managers who fail to upgrade will not only lose business, but more seriously are in danger of simply falling out of business entirely. SimCorp has an offering that – based on a modern, market conforming technology – allows its clients to mitigate risk, reduce cost and enable growth, and the company believes that those who adopt this approach will eventually prevail as the winners in a very competitive environment.
SimCorp's approximately 180 clients include some of the financially strongest investment managers in the industry. These include independent asset and fund managers, insurance companies, pension funds, mutual funds, banks and mortgage lenders. 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. Mutual trust and confidence is thus important, not only because satisfied clients generate revenue, but more importantly because satisfied clients are references for new clients. Trustworthy references are key when new clients choose a solutions provider, and it is thus vital that SimCorp maintains its reputation among clients as a reliable business partner consistently providing high-quality, value-adding solutions.
SimCorp has clients throughout the world – with a particularly strong foothold in the Nordic region covering Denmark, Sweden, Norway and Finland and in the central part of Europe; Germany, Switzerland and Austria. SimCorp also operates and has clients in Western Europe including Belgium, the Netherlands, Luxembourg and France, in Asia Pacific including Australia, Singapore and Hong Kong, in the United Kingdom also covering the Middle East, as well as in North America, including the USA and Canada.
Particularly North America is gaining increasing attention – not least because of the vast potential for SimCorp's solutions in that region. In the early wake of the financial crisis, increasingly more investment managers in North America are realizing the need to replace old legacy systems with modern solutions such as SimCorp Dimension. In order to stay ahead in a competitive environment, it is imperative that the business backbone is up to speed and investment managers must upgrade technology to fuel growth and inspire investor confidence. In the past year alone, five North American investment managers have replaced a legacy system in favor of SimCorp Dimension, further confirming SimCorp's position as a provider of value-adding solutions.
SimCorp's solution, SimCorp Dimension, is an integrated suite of front-to-back solutions and related services for business process automation in investment management. Completely modular, the business solutions individually support any part of the investment management value chain or can be combined to support the entire buy-side investment management value chain across the enterprise.
In addition to its software solutions, SimCorp also provides business related services for its clients and the solutions covered in SimCorp Dimension can hence be acquired with or without additional services. SimCorp's comprehensive
services catalog offers a variety of professional services that are designed to assist clients throughout the life cycle of their software acquisition – from initial implementation planning and configuration through ongoing maintenance, operations, IT and end-user training programs, and all the way to optimizing business processes.
The flexibility of SimCorp Dimension allows clients to choose from different deployment models, ranging from purchasing software only to also including implementation services, to adding business process outsourcing services (called a packaged solution) to adding operational services (called a serviced solution).
In order to offer clients added value when they choose a SimCorp solution, it is essential that SimCorp's employees have up-to-date knowledge of financial instruments and investment management processes, including international and national standards, as well as legislation and other requirements. A combination of comprehensive knowledge of financial theory and insight into clients' business processes is therefore paramount for SimCorp's business activities and the ability to develop and offer clients competitive, high-quality and value-adding solutions. The SimCorp staff consists of highly skilled employees with extensive financial expertise and software know-how – well over 80% of Sim-Corp employees hold an academic degree, mostly in finance, economics, IT or engineering.
SimCorp keeps a permanent focus on recruiting and retaining highly skilled, top-performing employees. Provision of ongoing training, education and knowledge sharing are key elements in these efforts. As an example, all employees in SimCorp participate in regular employee performance reviews to identify and follow up on specific, individual objectives related to the company's overall targets. This allows each employee to see and understand their own contribution to the company's performance, while management is able to continuously monitor target achievement and refocus efforts, if required.
For the purpose of achieving its ambitious targets, SimCorp further operates comprehensive training programs for both employees and managers. An important part is the SimCorp Academy certification program, which is mandatory for all SimCorp Dimension consultants. SimCorp Academy builds
competences in and around the use and implementation of SimCorp Dimension and thus gives all SimCorp consultants the very best qualifications for offering clients high-quality service and contributing to discussions and analyses. Sim-Corp also runs a comprehensive leadership training program, the SimCorp Leadership Academy, to ensure that SimCorp has management resources that are among the best in the industry with the ability to develop, challenge and strengthen employee competences and corporate culture.
As with all training in SimCorp, the elements of the training programs are linked to the practical development of experience in the organization in order to fully optimize the benefit derived from training.
Even if the market for investment management solutions, in which SimCorp competes, is considered a niche market, there is still a perpetual need to present one's offering to the market, and to build and enhance awareness. As part of Sim-Corp's efforts to increase awareness, SimCorp is building a strong global thought leader position as a platform for sales execution. The strategic message is: mitigate risk, reduce cost and enable growth.
"The SimCorp staff consists of highly skilled employees with extensive financial expertise and software know-how – well over 80% of SimCorp employees hold an academic degree, mostly in finance, economics, IT or engineering."
SimCorp's thought leadership program includes the publication of Journal of Applied IT & Investment Management – a magazine with a global circulation of 24,000 copies that goes out to SimCorp clients and subscribers world-wide, and is available in selected airline business lounges. SimCorp has also built a comprehensive online resource portal that covers all major regulatory changes and requirements. The portal includes expert views and best practices, test and assessment tools and IT implication analyses.
A key component of SimCorp's thought leadership program is the independent research institution, SimCorp StrategyLab, established in 2009. In close collaboration with internationally recognized academics and established industry
experts, SimCorp StrategyLab carries out its own research and analysis of trends and challenges in the financial sector. SimCorp StrategyLab also contributes competent suggestions for structural IT methods and tools, which are intended to minimize risk and propose strategic cost savings in order to create a basis for growth in the financial industry. The industry experts include several of SimCorp's clients who – by taking part in the research – not only strengthen their partnership with SimCorp, but also ensure that a more operational approach is taken to the strategic issues that SimCorp StrategyLab deals with.
In 2012 SimCorp StrategyLab published three white papers on regulation in the capital markets, focusing on OTC deriva tives, Solvency II, and UCITS IV and MiFID II, respectively. The intelligence derived from the SimCorp StrategyLab research is used by SimCorp to remain at the forefront of the financial industry, its challenges and its possibilities. SimCorp also believes that the work of SimCorp StrategyLab, and its pub lications, contribute positively to SimCorp's image among professional investment managers.
SimCorp's strategic development is based on a series of overall targets that management has broken down into measurable components so as to enable the company to track progress. The general targets are categorized within the fields of market growth, innovative product development and quality assurance, as well as competence building. The focus areas aim to ensure a sustained strong financial per formance – for the benefit of all SimCorp's stakeholders.
Because SimCorp continuously invests substantial resources in its solutions, services and knowledge, SimCorp is the solid and secure choice for those wanting to focus their energies on value-adding activities within investment management.
SimCorp's long-term target is to generate significant annual revenue growth, and the company's ambition is to get back to double-digit annual growth rates.
The challenging markets conditions that prevailed throughout 2010 and 2011 continued into 2012 in certain of the markets in which SimCorp operates. While the 'eurozone' markets remained in dire straits triggered by uncertain macroeconomic factors influenced by the crisis in Spain, Italy and Greece, market sentiments improved somewhat in the Asian and North American markets. Looking into 2013 the underlying positive macroeconomic trends in those two regions are expected to continue, whereas it still seems premature to claim that 2013 will be the year Europe returns to some sort of normal market conditions. Thus on balance, the macroeconomic outlook for the markets in which SimCorp operates provides little reason to change SimCorp's cautious view on the overall outlook.
As was the case in 2011, reluctance to invest was the general market trend in 2012 and it is expected to continue into 2013. As a consequence, competition for the limited number of opportunities in the market has intensified. However, Sim-Corp continued to win market share during 2012. SimCorp's unique product offering combined with its world class employees gives comfort to both existing and new clients considering investments in software despite difficult times.
Despite the clear need for new and improved legislation in the global investment management industry, progress on turning ongoing legislative initiatives into real regulation that investment managers can actually implement is slow. Potential new regulation is often postponed or in some cases even
suspended entirely. However, some regulatory initiatives both in Europe and in North America were launched during 2012. Most notable was the introduction of the "central counter party clearing" regulatory requirements as part of the Dodd Frank Act in the US. Even though progress on the regulatory front has been slow in 2012, many regulators have advanced the process of updating regulations based on new legislation during the year and transparency in this area is expected to improve in 2013.
There are indications in the market that major IT projects are being considered as the increased urgency of legacy system replacement combined with a greater confidence in the long term financial environment has encouraged potential clients to consider improved operating platforms. Furthermore, liquidity risk, credit risk and the need for transparency in areas such as exchange traded derivatives and collateral will drive changes and thus investments through the buy side industry.
SimCorp believes that investment managers' IT budgets for 2013 will remain at the same level as in 2012. Investment managers continue to perform thorough due diligence before new investment decisions are made, and such decisions will only be made if they can be based on solid business cases.
The most important focus areas in the investment management industry are expected to be:
"SimCorp was a key factor in our ability to almost double assets under management from €7 billion to current levels around €13 billion."
— Jan Weber, Chief Operating Officer at DIAM International
In recent years, SimCorp has put substantial efforts into developing new and improved functionality in SimCorp Dimension, and SimCorp is convinced that the competitive strength of its solutions has been enhanced. SimCorp remains focused on increasing competitiveness, especially by maturing its front office offerings for portfolio management, compliance and dealing support, and by offering world class middle and back office solutions that meet the requirements of the post crisis challenges.
SimCorp's unique value proposition is based on a scalable and highly modular enterprise solution, offering high-quality software products with state-of-the-art functionalities and features. SimCorp continues to streamline its internal development process to increase productivity and effectiveness to better address market trends. The overall aim is to continuously improve time to market and product quality.
Supported by the functionality provided by SimCorp Dimension and substantial, sustained investment in both new functionalities and competences, the Group stands well-positioned to execute its strategy in a changing market environment, while also being structurally prepared for future market developments – short term, medium term and long term. On this basis, SimCorp expects to continue to gain market share.
Despite the lack of double-digit revenue growth rates over the past three years SimCorp still considers itself a growth company, and as such, staying focused on executing on the opportunities while at the same time maintaining sustained profitability are core elements of the targets for 2013 and beyond.
The strategic themes for 2013 fall into four main areas:
Within each of the strategic themes SimCorp has identified a number of operational targets to be achieved in 2013.
To revitalize software sales, SimCorp will among other things continuously focus on increasing the pipeline for new sales – in monetary terms as well as in the number of active sales cases, and ensure sale of new modules to existing clients.
To support the growth markets, SimCorp will continue to invest in the development of SimCorp Dimension to cater for the specific North American market requirements, and maintain focus on UK and France that both represent a long-term growth opportunity for SimCorp in Europe.
In order to bring more services to the market in 2013, Sim-Corp will increase the number of clients that acquires existing services and also develop and expand existing services.
And finally – in whatever activity SimCorp undertakes and in the goals that are set forth for 2013 – SimCorp will strive to be accountable by continuing to build a culture where each individual feels accountable for delivering what SimCorp has promised its stakeholders.
Given the volatile outlook for Europe in 2013, the Group expects revenue growth to be in line with 2012 meaning 5% or more measured in local currencies, and an EBIT margin of 22% or more.
The projected percentage breakdown of revenue for 2013 is as follows: License fees between 20–30%; fees from professional services approximately 30–35%; and maintenance income around 45%. Compared to previous years the breakdown of revenue has not changed materially. The breakdown of the license fee income is expected to be one third for license fee revenue from new licenses and two
thirds from sales of additional licenses to existing customers. The license fee revenue from additional license agreements is expected to be between 5%-7% of the installed license base at the beginning of the year (EUR 545m). 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 and such orders are 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 at January 1, 2013 are expected to account for more than 90% of total revenue in 2013 – unchanged from 2012. Business with existing clients is typically less dependent on general economic conditions in the short term, as it mainly consists of regular maintenance income. Revenue from clients in the process of implementing a SimCorp system solution consists mainly of professional service fees and license income from license agreements already entered into (order book) as and when such implementation projects are completed.
Maintenance income is stable and can be reliably predicted.
Fees from professional services are primarily based on hourly-paid services and can be divided into three categories – implementation of initial license agreements, implementation of additional license agreements and operational consulting services. The distribution of the total revenue from professional services between these three types of services is expected to be fairly even.
Staff costs are expected to account for around 75% of the company's expenses in 2013. R&D is expected to account for around 30% of total expenses and the relative share is expected to decrease, while sales and distribution costs are expected to grow due to planned activity. Administrative expenses are expected to be stable.
SimCorp's long-term target is to generate significant, annual revenue growth, and the company's ambition is to get back to double-digit annual revenue growth rates and continuously improve profitability.
SimCorp expects to continue to gain market share. This belief is based upon the Group's ability to meet market requirements and its substantial, sustained investment in
R&D and people. The investments made in past years have positioned SimCorp to adapt to rapidly changing markets, as well as to respond to structural trends, short term, medium term and long term.
In a changing and highly volatile business environment in which performance depends on the ongoing achievement of a number of success criteria, SimCorp's business activities involve a range of commercial and financial risks that may affect the Group's continued operations and development.
The section below contains a brief description of the most important strategic and tactical risks that SimCorp finds of particular importance to the company, as well as a brief description of the risk prevention measures implemented to mitigate these risks. A detailed description of the financial risks that the Group is exposed to is provided in note 29 to the financial statements.
Overall, management believes that SimCorp stands well prepared to meet the challenges described. The Group continually monitors factors that are subject to uncertainty and thus involve a potential risk and such continuous risk monitoring is reported to the Board of Directors, on a quarterly basis. These reports also include the probability of potential risks materializing as well as an assessment of the possible impact on the company's financial performance – considering the various options for mitigation – for a given period of time.
Anticipating and responding to important trends in the market for professional investment managers is critical to SimCorp's ability to continuously win market share. It therefore poses a strategic market risk that the competitors identify such trends earlier than SimCorp. There is also a risk that the competitors are able to expand their international services and distribution capacity not only faster but also more efficiently than SimCorp.
SimCorp's business is founded on specialist expertise and innovation. Therefore, it is imperative that SimCorp continues to attract, retain and develop the most skilled employees and is able to identify and incentivize the best management talent. Failure to do so involves a risk to the company's continued development. In addition, the Group considers that failure to continue to maintain, protect and retain SimCorp's corporate values as a fundamental element of business execution and development constitutes a genuine risk.
System requirements in the market are to be met through continuous product innovation and improved technical infrastructure and technical capabilities of the software product. If SimCorp fails to constantly provide a functional solution based on a technology platform conforming to market standards, it poses a risk of significant loss of market share.
As a provider of client services, the ability to provide fully standardized end-to-end serviced solutions that cover all elements such as technical infrastructure, WAN lines, thirdparty integration, databases, data interfaces and software applications as well as other required components is key.
Such services are provided by SimCorp and any subcontractor that SimCorp engages. If SimCorp fails to balance the requirements of the clients and the agreements with the subcontractors, the Group risks not only impairing the clients'
businesses but also its own. The most apparent risk, in this case, is the possible breach of service level agreements and other committed standards.
An important risk which the Group has to consider on a regular basis, not least in the light of recent years' developments in the financial markets, is the extent of macroeconomic conditions that may impact both existing and new clients' incentive to invest. Also new specific requirements or legislation in local markets may influence the current interest for SimCorp's product.
As a knowledge-based business, SimCorp's ability to constantly develop and challenge its employees is crucial. Failure to provide the right individual challenges, training and effective tools to efficiently share knowledge with due consideration of the company's situation and potential therefore constitutes a risk to the Group.
SimCorp's ability to constantly present the best quality software products to its clients is central. Inadequate quality control and testing of the Group's products prior to the release of new software versions therefore involve the risk of reduced client satisfaction and loyalty.
Improving the efficiency of business processes is a permanent focus area for SimCorp. Failure by the company to adequately enhance the efficiency of its own business processes as and when it enhances its capacity involves a risk that the proportion of costs will rise in connection with continued business growth.
SimCorp's activities comprise the development, sale and implementation of software and services, including general office activities and business travel, primarily in connection with servicing clients. Although SimCorp's products and business activities do not involve a direct impact on the environment, the daily energy consumption, first and foremost, and business travel have an environmental impact. Such activities are nonetheless necessary working in a global business with international subsidiaries.
Being a technology company whose core business is based on modern information technology, SimCorp's failure to adequately protect itself against IT risks represents a significant risk. Unauthorized access to SimCorp's network/ data constitutes a potential risk to applications as well as the infrastructure/technical environment and data stored on SimCorp's network. Theft of code and know-how as well as virus attacks also represent potential risks. This again entails a risk of prolonged system breakdown that may impair productivity and potentially make SimCorp unable to service its clients.
Protecting SimCorp's vital business interests is essential to the Group's continued operations and development. This includes legal risks that may influence SimCorp's business. SimCorp believes that contractual risks are most critical, followed by legal risks related to regulatory requirements.
Contractual risks imply that client contracts or other agreements impose abnormal obligations on SimCorp if they are not drafted in a balanced way taking into account local business practices, clients' legitimate requirements as well as protection of the Group's material business interests. Regulatory requirements with respect to, for example, data protection, confidentiality agreements, IPR and fraud constitute a risk if SimCorp fails to meet such requirements or does not implement the requirements into its business procedures in a timely fashion. SimCorp is subject to tax and fiscal policies in the countries where the Group operates. Changes to such policies in the countries in question may affect SimCorp's tax and fiscal position and hence pose a risk.
Due to the nature of SimCorp's operations, the Group is exposed to changes in currency exchange rates. In a global business environment where a growing part of SimCorp's revenue derives from non-Euro currencies, there is a potential risk if SimCorp fails to adequately hedge its currency exposure. A detailed analysis and description of the financial risk exposure is provided in note 29 to the financial statements.
Generally, the financial reporting process involves the risk of incomplete overview of or insight into applicable legislation and potential business risks. There is also a risk of inadequate internal controls to avoid significant errors and omissions in financial reporting. The Danish Financial State-
ments Act requires that the presentation of the financial statements should include a description of the main features of the Group's internal controls and risk management in relation to the financial reporting process. The full wording of SimCorp management's statutory description under section 107 b of the Danish Financial Statements Act is available at the company's website www.simcorp.com/corpgov2012UK.
Through extensive market research and industry analyses, SimCorp keeps abreast of trends and tendencies in the global, financial markets. This combined with its employees' extensive industry insight provides SimCorp with detailed knowledge of existing and potential markets and of functional, structural and legal requirements.
Further, SimCorp's business model provides for very close and longstanding relationships with its clients, which allows SimCorp to continuously be at the forefront of trends in the market. To ensure the company's distribution capacity, Sim-Corp's international distribution network is expanded and extended in a controlled process, aiming to strike a balance between short-term profitability and preparing for the future. This is done by setting up new local distribution entities. Macroeconomic conditions are consistently monitored, and SimCorp's software solutions are developed in step with requirements defined by the market, either specifically or indirectly as a consequence of economic trends. In 2009, SimCorp established the independent research institution, SimCorp StrategyLab, which in collaboration with academia and experts from the financial sector, researches and analyses market trends and investigates forward-looking patterns within the investment management industry, providing SimCorp with valuable insights into financial market trends.
Each year, SimCorp allocates substantial resources to in-house and external training and to developing the professional and personal skills of its employees. An extensive in-house leadership development program has been established, aiming 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. All ongoing training is closely linked to the practical development of experience in the organization in order to optimize the benefit derived from training.
SimCorp offers updated product versions every six months. Updates are based on the systematic collection and prioritizing of client and market requirements and provide enhanced system functionality as well as improved technical infrastructure. Due to SimCorp Dimension's high configurability and flexibility, among other factors, a key element of the product development strategy is extensive quality assurance and consecutive testing prior to the release of new software versions. SimCorp continuously raises and follows up on its internal quality targets to ensure that they are aligned with expected market developments.
For the purpose of mitigating the risks that SimCorp undertakes as a provider of full-service packages, the Group has established various measures to control both external and internal risk. Externally, a due diligence process is conducted on each subcontractor that the company engages in the services area. This is to make sure that the supplier has the sufficient strength – financially, organizationally as well as product-wise – to meet SimCorp's requirements. Internally, a clear description of the roles in each delivery component provides an overview and allows for a clear segregation of duties. Moreover, SimCorp consultants undergo continuous training and development to ensure they possess the required knowledge and experience about operational services in order to provide added value for SimCorp's clients.
SimCorp has developed, set up and operates an infrastructure and in-house systems that allow it to monitor individual components of the business processes. This creates a comprehensive overview, providing constant focus, risk prevention and the foundation for continued efficiency enhancements.
As part of SimCorp's Corporate Social Responsibility commitment, the Group aims to reduce its impact on the environment and to act with the greatest possible respect for its surroundings. Among other initiatives, the company has replaced IT hardware with low-energy equipment, implemented video conferencing equipment at subsidiary locations to reduce the need to travel, and set up automatic light and heating controls to minimize energy consumption outside working hours. The company regularly looks for new initiatives to reduce its energy consumption and the impact on the external environment.
SimCorp continuously monitors its global, technical infrastructure, aiming to predict and minimize risks in connection with production and the operation of SimCorp's business. Through established procedures SimCorp has solutions to quickly restore critical business services. SimCorp also operates a high security level in connection with access to data. The company has implemented strict access control to the physical environment as well as to its network and stored information. The controls are monitored and reviewed on a regular basis in order to optimize security in this area.
It is vital to the company that it continues to claim and protect the copyright to its products and strikes a balance in the legal obligations to which the company may become subject. The company thus ensures the specific text of all contracts entered into by the Group as well as the correct wording of statements and declarations.
SimCorp is also responsible for monitoring and assessing the scope of new legislation that may affect SimCorp's own business procedures, including the identification of significant tax risks as well as preparing documentation to covering these.
SimCorp's finance department manages the Group's currency and financial exposure pursuant to the Board-approved treasury policy and monitors that currency positions and payments are hedged in order to keep the overall currency exposure within the limits defined by the Group's treasury policy. The company has implemented a number of business procedures and controls to enhance the transparency of individual activities and providing a better overview of financial exposure. See note 29 to the financial statements, 'Financial instruments and risks'.
The company has implemented various business procedures and controls to ensure compliance of the processes in connection with and relating to financial reporting. They are based on a range of general principles, policies and procedures, which are assessed and adjusted by SimCorp's Board of Directors and Executive Management Board on a regular basis. Furthermore, the company has set up a controller
function to check the financial reporting of subsidiaries, and established a whistleblower function.
The Executive Management Board monitors compliance with relevant legislation and reports to the Board of Directors.
Management report Corporate Governance
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.
In a very limited number of areas SimCorp has decided not to comply with the recommendations issued by NASDAQ OMX Copenhagen A/S. In these few cases SimCorp considers that the limited size and/or complexity of its business does not justify full compliance with the recommendations. Consequently, SimCorp is not in full compliance on the matters of separate nomination, remuneration and audit committees.
On the subject of nomination, the Chairman, the Deputy Chairman and the CEO are asked by the Board of Directors to identify new, potential Board members. The Board of Directors discusses a short-list of candidates and decides collectively who are to be nominated by the Board of Directors.
SimCorp's remuneration policy, which is available at the company's website, lays forward a clear description of SimCorp's remuneration principles and procedures.
Finally, the duties relating to audit are headed by an appointed, independent member of the board, however they are discharged collectively by the Board of Directors acting as audit committee. The Board of Directors has decided that, based on the audit requirements, it is expedient for the Board to act collectively as an audit committee under section 31 of the Danish Act on Registered and State-Authorized Public Accountants. Accordingly, the Board of Directors must at all times ensure that at least one independent Board member has the required audit or accounting competences. All Board meeting agendas also include a recurring item concerning the discussion of matters related to the collective responsi-
bility of the Board of Directors as an audit committee. In the principles for the overall management of SimCorp that are embodied in the company's Corporate Governance Guidelines (statutory corporate governance statement pursuant to section 107 b of the Danish Financial Statements Act for the financial year 2012), SimCorp accounts for all recommendations and how the company interprets them. These guidelines are available at the company's website at www.simcorp.com/corpgov2012UK.
The corporate governance guidelines provide the overall direction for SimCorp's Board of Directors and Executive Management Board when defining working procedures and principles. The guidelines are intended to ensure the efficient and adequate management of SimCorp within the framework defined by applicable legislation, rules and recommendations for Danish listed companies and by SimCorp's articles of association, mission, corporate vision and values.
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 sets up durable
and constructive relationships with the Group's primary stakeholders: shareholders, clients, employees and suppliers. Such professional and commercial relations are based on the Group's mission and on mutual trust and responsibility. SimCorp's information policy plays a key role. The policy is designed to ensure that stakeholders receive timely, relevant and full information on the Group's activities to the extent such disclosure would not be detrimental or potentially detrimental to SimCorp's existing or future competitive position.
In order to enable shareholders and equity market participants to make an independent, professional evaluation and analysis of SimCorp's commercial and financial position and future prospects, SimCorp publishes material information on the company's financial results, business activities and strategic goals. Part of this disclosure is a regular element of SimCorp's interim reports.
Corporate Social Responsibility in SimCorp is firmly based on the Group's core values and SimCorp's 'Corporate Governance Guidelines' ('Retningslinjer for den overordnede ledelse af SimCorp') 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.
Overall, SimCorp aims to maintain and enhance its professional and commercial relations with internal and external stakeholders based on mutual respect. SimCorp endeavors to comply with applicable legislation, local as well as international.
In the conduct of business, SimCorp maintains high ethical standards and strives to perform its activities with integrity and responsibility. SimCorp is greatly committed to proper and diligent conduct in respect of the services and products we provide to our clients. We commit ourselves to mutually value-adding, long-term relationships with our clients with respect for each individual client's business and social environment. We expect our clients to share our standards for sound and responsible behavior and trust them to operate in a legal and ethical manner. We respect the individuality of our employees and offer each equal opportunity for learning and growing in accordance with their individual needs and capabilities as well as the company's interests. Our communication policy ensures our shareholders equal, adequate and timely access to information on our business.
SimCorp pursues an open dialogue with all investors and analysts about the company's activities and financial performance, and aims to reduce its environmental impact and act with sustained reliability and respect for our surroundings. The company's approach to Corporate Social Responsibility is described in more detail in the document entitled Corporate Social Responsibility (statutory corporate social responsibility statement pursuant to section 99 a of the Danish Financial Statements Act) posted on the company's website at www.simcorp.com/CSR2012UK.
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. In 2012 SimCorp's Board of Directors held seven meetings, following up on the Group's current business and financial performance. In addition, the Board of Directors held an offsite strategy seminar in August 2012 to discuss the Group's long-term strategy.
The Board of Directors is composed so as to ensure its independence of any special interests. The Board of Directors therefore consists of a number of members which is sufficient to enable an appropriate distribution of tasks among the members as well as an effective and rapid decision-making process. It is essential that the Board of Directors acts as an efficient, visionary and result-oriented dialogue partner for SimCorp's Executive Management Board. Therefore, the Board of Directors has defined the ideal profile for the Board's aggregate competences to ensure that its members between them represent the required professional breadth and knowledge of the industry
as well as the required business and financial competences. The competences have been identified within the areas of strategy, finance and operations, as well as organization and management. The ideal profile is updated regularly allowing for SimCorp's strategic position and challenges.
"The corporate governance guidelines provide the overall direction for SimCorp's Board of Directors and Executive Management Board when defining working procedures and principles."
As provided in the company's articles of association, SimCorp'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 four members elected by the shareholders and two members elected by the employees. Members of SimCorp's Board of Directors are elected for one year at a time, and employee-elected members for three years.
Annually, the Board of Directors carries out a selfassessment. Thus, in December 2012 SimCorp's Board of Directors and Executive Management Board performed a self-assessment process headed by the Chairman of the Board based on written contributions from the individual members. The Deputy Chairman of the Board is responsible for carrying out the assessment of the Chairman. The selfassessment process comprises an evaluation of the work and contribution of the Executive Management Board and the Board of Directors within the areas of strategy, finance and operations, as well as organization and management. Furthermore, individual evaluations are performed of each Board member's work and contributions to the Board's work as a whole.
The results of the self-assessment were discussed by the Board, also to ensure that the general principles for good corporate governance are upheld. This led to an evaluation of the collaboration between the Board of Directors and the Executive Management Board as well as a review of the implementation of the initiatives agreed in the self-assessment process conducted in 2011. Based on the self-assessment, it was concluded that the Board's collective work is efficient
and the competences described in the ideal profile are represented by the aggregate competences of the Board of Directors. However, the Board also noted that, due to the relatively small number of Board members, the Board's competences in certain areas rely on individual persons.
The Board of Directors has overall responsibility for SimCorp maintaining appropriate procedures to monitor, measure and manage the company's risks and for such procedures being firmly embedded in the company's organization. A general description of risks is provided in the section 'Risk management' on page 27. As part of its risk management, the company has set up a whistleblower body, authorized by the Danish Data Protection Agency, which, in addition to usual control functions, is intended to provide access to report on suspected irregularities in the business. The Board of Directors is responsible for appointing a representative to manage the whistleblower policy in a trustworthy and responsibly independent manner. The Board of Directors has appointed independent member of SimCorp's Board of Directors, Simon Jeffreys, to currently manage the whistleblower body and act as gatekeeper.
All reports will, depending on the nature of the matter, be forwarded to the CEO or the Chairman of the Board of Directors or to both (or to the company's external legal advisor if the information concerns the Chairman of the Board and/or the CEO), who will consider additional analyses and measures in connection with the matters reported. Reports and queries received through the whistleblower system will be treated as confidential.
At December 31, 2012 SimCorp had around 6,600 registered shareholders representing more than 92% of the company's share capital. Approximately 25% of the SimCorp shares were managed by investors who also are clients of SimCorp.
SimCorp's share capital amounts to a nominal value of DKK 45,000,000 divided into 45,000,000 shares of DKK 1 each. Each share carries one vote, and all shares are freely transferable. All shares confer equal rights on their holders.
SimCorp shares (ISIN code DK0016026164) are listed on NASDAQ OMX Copenhagen A/S under the symbol SIM and classified under sector code 45103010. SimCorp shares are traded in denominations of DKK 10. Thus, the total listed number of traded shares is 4,500,000.
The official share price at December 31, 2012 was DKK 1,264 for each traded share with a nominal value of DKK 10, equal to a market capitalization of EUR 763m (DKK 5.7bn).
The price of SimCorp's shares rose by 44% in 2012. By comparison, the OMXC20 index, the NASDAQ OMX Copenhagen A/S blue chip index, rose by 24%, while the index for medium-sized companies (OMX Nordic Mid Cap), of which the SimCorp share is a component, rose by 19%. Relative to 2011, the average daily turnover of SimCorp shares on NAS-DAQ OMX Copenhagen A/S rose by 1% to EUR 1.0m.
At December 31, 2012, SimCorp had around 6,600 registered shareholders representing more than 92% of the company's share capital, a reduction of approximately 400 registered shareholders during the year. At the same time share capital held by shareholders registered by name increased by 1 percentage point compared to 2011. More than 55% of the company's registered share capital is held in foreign securities accounts, unchanged compared with December 31, 2011. The number of shareholders with securities accounts in Denmark constituted around 87% of the total number of shareholders. Approximately 60% of the share capital is held or managed by the 25 largest shareholders.
The distribution of shareholders is listed below:
| Holding / no. of shares of DKK 10 |
Number of registered shareholders |
Relative share of all registered shareholders |
Total relative share of capital |
|---|---|---|---|
| 10,000 < | 69 | 1.0% | 65.9% |
| 5,000 < 9,999 | 43 | 0.7% | 6.8% |
| 1,000 < 4,999 | 198 | 3.0% | 10.4% |
| 100 < 999 | 1,070 | 16.3% | 6.2% |
| < 100 | 5,192 | 79.0% | 3.2% |
| Total | 6,572 | 100.0% | 92.4% |
Management report Shareholder information
Similar to the year before, around 9% of the company's share capital was held by the company's management and by approximately 600 employees in 2012. Furthermore, SimCorp estimates that Danish and foreign institutional investors held some 55% of the company's shares. Approximately 25% of SimCorp shares were managed by investors who are also clients of Sim-Corp. The company held 5.4% of the shares as treasury shares. In addition, the following shareholder has notified the company, as required by section 55 of the Danish Companies Act, that it holds more than 5% of the company's share capital: – The Danish Labor Market Supplementary Pension Fund (ATP), Denmark, 8.0%.
In accordance with SimCorp's policy for incentive remuneration adopted by the shareholders in annual general meeting, an employee share program has been established on terms of which the company has sold own shares to the employees as part of the company's corporate bonus program. The program comprised 14,241 shares of DKK 10, distributed among employees of the company and its subsidiaries, including 962 shares of DKK 10 to the Executive Management Board. In accordance with the approved remuneration policy, the price of the employee shares was fixed at DKK 373 for each share
of DKK 10, equaling 40% of the average revenue-weighted market price in the period from March 1 to March 5, 2012. A total of 340 employees participated in the employee share program. The employee shares must be held in restricted accounts until March 15, 2015.
The Group plans to continue operating a share-based incentive program for the employees in the future in the form of a restricted stock unit program. The restricted stock units will gradually vest over a three-year period and are further subject to employment at the time they vest.
In accordance with the remuneration policy approved by the shareholders in annual general meeting, the Board of Directors approved a share-based incentive program on April 1, 2012 based on restricted stock units. A total of 15,471 restricted stock units of DKK 10 have been granted, including 6,420 stock units of DKK 10 to the Executive Management Board. The restricted stock units will vest after three years, 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 financial years
2012–2014. If the two latter conditions are only partially met, the undertaking with respect to the number of shares transferred to the participants after three years will be reduced, and may possibly lapse completely.
In addition, reflecting the ability to convert proceeds from the Corporate Bonus Program into share investment, 3,570 restricted stock units of DKK 10 relating to the corporate bonus program for 2011 were granted in 2012, and distributed among employees of the company and its subsidiaries, including 738 stock units of DKK 10 to the Executive Management Board. These restricted stock units will vest after four years, subject to continuing employment.
1,500 restricted stock units of DKK 10 each were granted to a senior employee in North America on April 1, 2012. 50% of these restricted stock units will vest after four years, and 50% after five years subject to continuing employment. 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.
In connection with Klaus Holse's appointment as CEO, 10,722 restricted stock units of DKK 10 each were granted to him on September 1, 2012 as Klaus Holse has completed his personal investment of DKK 5m in SimCorp shares. 60% of these restricted stock units will vest after three years, 20% after four years, and 20% after five years subject to continuing employment.
The share-based incentive program based on restricted stock units will continue in 2013 and comprises restricted stocks with a market value of approximately EUR 2.0m on the date of grant. Treasury shares will be acquired to cover the program obligations. SimCorp's share-based incentive schemes are further detailed in note 7 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 2013 continue to receive SimCorp shares with a total value equal to one third of their total remuneration. 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 December 31, 2012, the six members of the company's Board of Directors held a total of 11,387 SimCorp shares of DKK 10. The three members of the Group's Executive Management Board held a total of 15,027 SimCorp shares of DKK 10. SimCorp's rules for insider trading in the company's shares provide that members of SimCorp's Board of Directors and Executive Management Board may not trade in Sim-Corp shares if they hold inside, price-sensitive information and under no circumstances beyond a period of four weeks following the publication of the company's interim reports and annual reports. This also applies to all other individuals identified as permanent insiders. Pursuant to the Danish Securities Trading Act, SimCorp has reported changes in related party shareholdings to NASDAQ OMX Copenhagen A/S. All reports on the Board of Directors' and the Executive Management Board's trades are available on the company's website.
Additional information on the holdings of shares, stock options and restricted stock units in SimCorp 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 at 15:00 on Thursday, March 21, 2013, at SimCorp's headquarters, Weidekampsgade 16, Copenhagen, Denmark.
In order to ensure continuity in the composition of the Board of Directors, the four 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 82–83.
The Board of Directors intends to propose that the total remuneration to the Board of Directors for the financial year 2013 remains unchanged relative to the 2008 level and that, as previously, the remuneration will be composed of cash remuneration totaling EUR 0.21m (DKK 1.6m), representing two thirds of the total remuneration, and SimCorp shares at market value of around EUR 0.11m (DKK 0.8m) representing one third of the remuneration, totaling EUR 0.32m (DKK 2.4m). 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.
The Board of Directors intends to recommend to the shareholders in annual general meeting that the share capital be reduced by 1,500,000 shares at DKK 1 each by cancellation of treasury shares. Following this cancellation, the nominal share capital will be DKK 43,500,000 comprising 43,500,000 shares of DKK 1 each. The change requires an amendment to the articles of association.
Furthermore, the Board of Directors intends to propose a number of amendments to SimCorp's articles of association, including the authority to issue new share capital.
The agenda for the annual general meeting including any proposals will be published on Wednesday, February 27, 2013, on which date the notice convening the meeting will be sent to all shareholders registered with their e-mail addresses.
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 cost level of 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 generated 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 safe harbor 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 in annual general meeting that dividends of EUR 20.0m, equal to DKK 35.00 per share of DKK 10 nominal value, be distributed for the financial year 2012 corresponding to a payout ratio of 58%. In order to be eligible for dividends, shares must be registered in the custody account on or before March 21,
The Board of Directors and the Executive Management Board have today considered and approved the annual report for 2012 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 2012 and of the results of the parent company's and the Group's operations and cash flows for the financial year January 1– December 31, 2012.
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, February 27, 2013
Klaus Holse Chief Executive Officer Georg Hetrodt Chief Technology Officer Thomas Johansen Chief Financial Officer
Jesper Brandgaard Chairman
Peter Schütze Vice chairman Hervé Couturier
Simon Jeffreys
Jacob Goltermann Employee-elected Raymond John Employee-elected
We have audited the consolidated financial statements and the parent company financial statements of SimCorp A/S for the financial year 1 January–31 December 2012. The consolidated financial statements and the parent company financial statements comprise [income statement, statement of comprehensive income, balance sheet, statement of changes in equity, cash flow statement and notes, including a 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 that 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 as to 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 auditors' judgement, 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 auditors consider 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 opinion.
Our 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 2012 and of the results of the Group's and the parent company's operations and cash flows for the financial year 1 January – 31 December 2012 in accordance with International Financial Reporting Standards as adopted by the EU and Danish disclosure requirements for listed companies.
Pursuant to the Danish Financial Statements Act, we have read the Management's review. We have not performed any further procedures in addition to the audit of the consolidated financial statements and the parent company financial statements. On this basis, it is our opinion that the information provided in the Management's review is consistent with the consolidated financial statements and the parent company financial statements.
Copenhagen, February 27, 2013
KPMG
Statsautoriseret Revisionspartnerselskab
State Authorized State Authorized Public Accountant Public Accountant
Finn L. Meyer Lau Bent Baun
Statsautoriseret Revisionspartnerselskab
Fin T. Nielsen State Authorized Public Accountant
| 2011 | 2012 | 2011 | 2012 | |
|---|---|---|---|---|
| EUR'000 | EUR'000 | Note | EUR'000 | EUR'000 |
| INCOME STATEMENT | ||||
| 82,393 | 90,877 | 3, 4, 5 Revenue | 194,815 | 209,190 |
| 26,267 | 30,839 | 6, 7, 8 Cost of sales | 66,830 | 76,575 |
| 56,126 | 60,038 | Gross profit | 127,985 | 132,615 |
| 14,727 | 15,766 | Other operating income | 196 | 203 |
| 39,944 | 40,898 | 6, 7, 8 Research and development costs | 44,194 | 45,599 |
| 9,599 | 7,432 | 6, 7, 8 Sales and distribution costs | 24,492 | 27,344 |
| 12,493 | 13,823 | 6, 7, 8, 9 Administrative expenses | 13,145 | 12,958 |
| 10 | 2 | Other operating expenses | 10 | 2 |
| 8,807 | 13,649 | Profit (loss) from operations (EBIT) | 46,340 | 46,915 |
| – | – | 10 Share of profit after tax in associates | 107 | 141 |
| 27,167 | 26,488 | 11 Financial income | 2,610 | 2,006 |
| 1,822 | 1,843 | 12 Financial expenses | 1,884 | 2,066 |
| 34,152 | 38,294 | Profit before tax | 47,173 | 46,996 |
| 1,967 | 3,095 | 13 Tax on the profit for the year | 13,217 | 12,522 |
| 32,185 | 35,199 | Profit for the year | 33,956 | 34,474 |
| Earnings per share | ||||
| 14 Basic earnings per share of DKK 1 - EPS (EUR) | 0.77 | 0.80 | ||
| 14 Diluted earnings per share of DKK 1 - EPS-D (EUR) | 0.76 | 0.79 |
| 2011 | 2012 | 2011 | 2012 | |
|---|---|---|---|---|
| EUR'000 | EUR'000 | Note | EUR'000 | EUR'000 |
| STATEMENT OF COMPREHENSIVE INCOME | ||||
| 32,185 | 35,199 | Profit for the year | 33,956 | 34,474 |
| Other comprehensive income | ||||
| 253 | (314) | Foreign currency translation differences for foreign operations | 428 | (242) |
| 0 | 0 | Income tax on other comprehensive income | 0 | 59 |
| 253 | (314) | Other comprehensive income after tax | 428 | (183) |
| 32,438 | 34,885 | Total comprehensive income | 34,384 | 34,291 |
| Proposed distribution | ||||
| 17,573 | 19,965 | Dividend | ||
| 14,865 | 14,920 | Transferred to retained earnings | ||
| 32,438 | 34,885 |
| 2011 | 2012 | 2011 | 2012 | ||
|---|---|---|---|---|---|
| EUR'000 | EUR'000 | Note | EUR'000 | EUR'000 | |
| 32,185 | 35,199 | Profit for the year | 33,956 | 34,474 | |
| (17,726) | (16,016) | 32 | Adjustments | 18,888 | 18,708 |
| (1,985) | 7,563 | Changes in working capital | 844 | 4,285 | |
| 12,474 | 26,746 | Cash from operating activities before financial items | 53,688 | 57,467 | |
| 892 | 1,337 | Financial income received | 599 | 1,277 | |
| (750) | (429) | Financial expenses paid | (512) | (215) | |
| (2,923) | (3,818) | 13 | Income tax paid | (15,379) | (11,864) |
| 9,693 | 23,836 | Net cash from operating activities | 38,396 | 46,665 | |
| (1,341) | (15,178) | 16 | Share capital to subsidiaries | – | – |
| (1,197) | 0 | 16 | Loan, subsidiaries | – | – |
| 2,207 | 8,611 | 16 | Repayment of loan, subsidiaries | – | – |
| 98 | 60 | 10 | Repayment of loan, associates | 98 | 60 |
| 0 | 8 | 10 | Proceeds from sale of share, associates | 0 | 8 |
| (561) | (144) | 15 | Purchase of intangible fixed assets | (561) | (242) |
| (1,920) | (457) | 15 | Purchase of property, plant and equipment | (2,398) | (558) |
| 25 | 0 | Proceeds from sale of property, plant and equipment | 68 | 0 | |
| (54) | (40) | 17 | Purchase of financial assets | (105) | (74) |
| 7 | 10 | 17 | Proceeds from sale of financial assets | 20 | 40 |
| 24,272 | 24,443 | 16 | Dividends from subsidiaries | – | – |
| 21,536 | 17,313 | Net cash from/used in investment activities | (2,878) | (766) | |
| 31,229 | 41,149 | Net cash from operating and investment activities | 35,518 | 45,899 | |
| 0 | 714 | Sale of employee' shares | 0 | 714 | |
| 929 | 6,708 | Exercise of options | 929 | 6,708 | |
| (17,793) | (17,266) | Dividends paid | (17,793) | (17,266) | |
| (13,180) | (25,518) | 20 | Purchase of treasury shares | (13,180) | (25,518) |
| (30,044) | (35,362) | Net cash used in financing activities | (30,044) | (35,362) | |
| 1,185 | 5,787 | Change in cash and cash equivalents | 5,474 | 10,537 | |
| Total cash flows for the year | |||||
| 36,548 | 37,636 | Cash and cash equivalents at 1 January | 42,689 | 48,149 | |
| (97) | 133 | Foreign exchange adjustment of cash and cash equivalents | (14) | 211 | |
| 37,636 | 43,556 | Cash and cash equivalents at 31 December | 48,149 | 58,897 |
The Group has credit facilities with banks for EUR 10,0m (2011: EUR 10,0m).
| 2011 | 2012 | 2011 | 2012 | ||
|---|---|---|---|---|---|
| EUR'000 | EUR'000 | Note | EUR'000 | EUR'000 | |
| ASSETS | |||||
| Non-current assets | |||||
| 15 | Intangible assets | ||||
| 0 | 0 | Goodwill | 908 | 875 | |
| 1,049 | 527 | Acquired software | 1,054 | 623 | |
| 1,049 | 527 | Total intangible assets | 1,962 | 1,498 | |
| 15 | Property, plant and equipment | ||||
| 2,285 | 2,041 | Leasehold improvements | 3,275 | 2,717 | |
| 2,416 | 1,393 | Technical equipment | 2,882 | 1,660 | |
| 1,201 | 570 | Other equipment, fixtures and fittings | 1,656 | 836 | |
| 5,902 | 4,004 | Total property, plant and equipment | 7,813 | 5,213 | |
| Other non-current assets | |||||
| 9,313 | 24,459 | 16 | Investments in subsidiaries | – | – |
| 866 | 855 | 10 | Investments in associates | 1,214 | 1,364 |
| 11,445 | 2,448 | 16 | Receivables from subsidiaries | – | – |
| 60 | 0 | 10 | Receivables from associates | 60 | 0 |
| 1,743 | 1,767 | 17 | Deposits | 2,062 | 2,095 |
| 791 | 1,700 | 18 | Deferred tax | 3,897 | 5,680 |
| 24,218 | 31,229 | Total other non-current assets | 7,233 | 9,139 | |
| 31,169 | 35,760 | Total non-current assets | 17,008 | 15,850 | |
| Current assets | |||||
| 27,991 | 19,350 | 19 | Receivables | 47,826 | 46,124 |
| 912 | 946 | 24 | Income tax receivable | 3,326 | 1,335 |
| 1,587 | 2,087 | Prepayments | 3,169 | 3,585 | |
| 37,636 | 43,556 | Cash and cash equivalents | 48,149 | 58,897 | |
| 68,126 | 65,939 | Total current assets | 102,470 | 109,941 | |
| 99,295 | 101,699 | Total assets | 119,478 | 125,791 |
| 2011 | 2012 | 2011 | 2012 | ||
|---|---|---|---|---|---|
| EUR'000 | EUR'000 | Note | EUR'000 | EUR'000 | |
| LIABILITIES | |||||
| 20 | Equity | ||||
| 6,179 | 6,045 | Share capital | 6,179 | 6,045 | |
| 0 | 0 | Exchange adjustment reserve | (999) | (1,182) | |
| 44,551 | 45,567 | Retained earnings | 60,431 | 61,036 | |
| 17,573 | 19,965 | Proposed dividend | 17,573 | 19,965 | |
| 68,303 | 71,577 | Total equity | 83,184 | 85,864 | |
| Liabilities | |||||
| Non-current liabilities | |||||
| 0 | 0 | 18 | Deferred tax | 412 | 408 |
| 1,230 | 1,297 | 21, 22 | Provisions | 2,563 | 2,904 |
| 758 | 749 | Employee bonds | 758 | 749 | |
| 1,988 | 2,046 | Total non-current liabilities | 3,733 | 4,061 | |
| Current liabilities | |||||
| 81 | 0 | Prepayments from customers | 2,296 | 3,901 | |
| 28,889 | 28,028 | 23 | Trade payables and other payables | 27,653 | 29,155 |
| 0 | 0 | 24 | Income tax | 2,415 | 2,715 |
| 34 | 48 | 21 | Provisions | 197 | 95 |
| 29,004 | 28,076 | Total current liabilities | 32,561 | 35,866 | |
| 30,992 | 30,122 | Total liabilities | 36,294 | 39,927 | |
| 99,295 | 101,699 | Total liabilities and equity | 119,478 | 125,791 |
| EUR'000 | ||||
|---|---|---|---|---|
| Proposed | ||||
| Share | Retained | dividends for | ||
| capital | earnings | the year | Total | |
| Equity at January 1, 2011 | 6,179 | 40,491 | 17,915 | 64,585 |
| Comprehensive income for the year | ||||
| Profit for the year | 0 | 32,185 | 0 | 32,185 |
| Other comprehensive income | ||||
| Foreign currency translation differences from functional currency | 0 | 253 | 0 | 253 |
| Total other comprehensive income | 0 | 253 | 0 | 253 |
| Total comprehensive income for the year | 0 | 32,438 | 0 | 32,438 |
| Transactions with owners | ||||
| Dividends paid to shareholders | 0 | 64 | (17,915) | (17,851) |
| Share-based payment, options and shares | 0 | 2,445 | 0 | 2,445 |
| Tax, share-based payment | 0 | (119) | 0 | (119) |
| Purchase of treasury shares | 0 | (13,195) | 0 | (13,195) |
| Proposed dividends to shareholders | 0 | (17,573) | 17,573 | 0 |
| Equity at December 31, 2011 | 6,179 | 44,551 | 17,573 | 68,303 |
| Equity at January 1, 2012 | 6,179 | 44,551 | 17,573 | 68,303 |
| Comprehensive income for the year | ||||
| Profit for the year | 0 | 35,199 | 0 | 35,199 |
| Other comprehensive income | ||||
| Foreign currency translation differences from functional currency | 0 | (314) | 0 | (314) |
| Total other comprehensive income | 0 | (314) | 0 | (314) |
| Total comprehensive income for the year | 0 | 34,885 | 0 | 34,885 |
| Transactions with owners | ||||
| Cancellation of treasury shares | (134) | 134 | 0 | 0 |
| Dividends paid to shareholders | 0 | 370 | (17,573) | (17,203) |
| Share-based payment, employee shares | 0 | 1,934 | 0 | 1,934 |
| Share-based payment, options and shares | 0 | 8,951 | 0 | 8,951 |
| Tax, share-based payment | 0 | 225 | 0 | 225 |
| Purchase of treasury shares | 0 | (25,518) | 0 | (25,518) |
| Proposed dividends to shareholders | 0 | (19,965) | 19,965 | 0 |
| Equity at December 31, 2012 | 6,045 | 45,567 | 19,965 | 71,577 |
| EUR'000 | |||||
|---|---|---|---|---|---|
| Share capital |
Exchange adjustment reserve |
Retained earnings |
Proposed dividends for the year |
Total | |
| Equity at January 1, 2011 | 6,179 | (1,427) | 54,853 | 17,915 | 77,520 |
| Comprehensive income for the year | |||||
| Profit for the year | 0 | 0 | 33,956 | 0 | 33,956 |
| Other comprehensive income Foreign currency translation differences for foreign operations |
0 | 428 | 0 | 0 | 428 |
| Total other comprehensive income | 0 | 428 | 0 | 0 | 428 |
| Total comprehensive income for the year | 0 | 428 | 33,956 | 0 | 34,384 |
| Transactions with owners Dividends paid to shareholders |
0 | 0 | 64 | (17,915) | (17,851) |
| Share-based payment, options and shares | 0 | 0 | 2,445 | 0 | 2,445 |
| Tax, share-based payment | 0 | 0 | (119) | 0 | (119) |
| Purchase of treasury shares | 0 | 0 | (13,195) | 0 | (13,195) |
| Proposed dividends to shareholders | 0 | 0 | (17,573) | 17,573 | 0 |
| Equity at December 31, 2011 | 6,179 | (999) | 60,431 | 17,573 | 83,184 |
| Equity at January 1, 2012 Comprehensive income for the year |
6,179 | (999) | 60,431 | 17,573 | 83,184 |
| Profit for the year | 0 | 0 | 34,474 | 0 | 34,474 |
| Other comprehensive income | |||||
| Foreign currency translation differences for foreign operations | 0 | (242) | 0 | 0 | (242) |
| Income tax on other comprehensive income | 0 | 59 | 0 | 0 | 59 |
| Total other comprehensive income | 0 | (183) | 0 | 0 | (183) |
| Total comprehensive income for the year | 0 | (183) | 34,474 | 0 | 34,291 |
| Transactions with owners | |||||
| Cancellation of treasury shares | (134) | 0 | 134 | 0 | 0 |
| Dividends paid to shareholders | 0 | 0 | 370 | (17,573) | (17,203) |
| Share-based payment, employee shares | 0 | 0 | 1,934 | 0 | 1,934 |
| Share-based payment, options and shares | 0 | 0 | 8,951 | 0 | 8,951 |
| Tax, share-based payment | 0 | 0 | 225 | 0 | 225 |
| Purchase of treasury shares | 0 | 0 | (25,518) | 0 | (25,518) |
| Proposed dividends to shareholders | 0 | 0 | (19,965) | 19,965 | 0 |
| Equity at December 31, 2012 | 6,045 | (1,182) | 61,036 | 19,965 | 85,864 |
At December 31, 2012, the share capital amounted to DKK 45,000,000 divided into 45,000,000 shares of DKK 1 each (2011: DKK 46,000,000 divided into 46,000,000 shares of DKK 1). 1,000,000 treasury shares of DKK 1 each were cancelled on June 20, 2012. No shares shall confer any special rights upon any shareholder.
Dividend is distributed with DKK 30.00 per share of DKK 10 in 2012 and DKK 30.00 per share of DKK 10 in 2011.
The Board of Directors intends to recommend in annual general meeting that dividends of DKK 35.00 per share of DKK 10 are distributed in 2013. Additional information, note 20.
SimCorp A/S is a public limited company based in Denmark. The annual report for the period January 1 – December 31, 2012 includes the consolidated financial statements of SimCorp A/S and its subsidiary undertakings (the Group) as well as 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 February 27, 2013 the Board of Directors and the Executive Management Board considered and approved the annual report for 2012 of SimCorp A/S. The annual report will be presented to shareholders for approval at the annual general meeting to be held on March 21, 2013.
BASIS OF PREPARATION The functional currency of the parent company SimCorp A/S is DKK.
The annual report is presented in EUR as most of the Group's transactions are in this currency, rounded to the nearest EUR 1,000.
The annual report has been prepared in accordance with the historical cost convention, except for the measurement at fair value of derivative financial instruments.
The accounting policies 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.
Effective January 1, 2012, SimCorp A/S has implemented a number of mandatory accounting standards and interpretations which have not had any effect on the recognition or measurement of the Group's results, assets, liabilities or equity.
CONSOLIDATED FINANCIAL STATEMENTS The consolidated financial statements comprise SimCorp A/S (the parent company) and subsidiaries in which the parent company directly or indirectly holds more than 50% of the votes or otherwise exercises a controlling influence.
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 realised and unrealised gains and losses on intra-group transactions are eliminated.
Unrealised gains and losses on transactions with associates are eliminated in proportion to the Group's shares in the associates.
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 revaluations.
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.
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 date 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 and 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 enterprise in question are recognized directly in equity in the consolidated financial statements. 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' presentation 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 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 other comprehensive income.
Settlement of intra-group balances considered part of the net investment are not per se considered a partial divestment of a subsidiary.
Derivative financial instruments are initially recognized in the statement of financial position at their fair values on their trade dates and differences arising when they are subsequently measured at fair values are taken through profit or loss in financial income or financial expenses. Attributable transaction costs are recognized in the income statement.
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 described above.
License revenue under a fixed termed license agreement is recognized on a straight-line basis over the term.
Professional service fees are recognized as and when the work is performed. Revenue from maintenance agreements is recognized on a straightline basis over the contract period.
Other revenue, such as revenue from training course activities, is recognized in the income statement when the services have been delivered.
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 staffrelated costs, depreciation and amortization, and indirect costs, such as rent and technological infrastructure.
Research and development costs comprise salaries, share-based payment, 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 capitalisation, see the section 'Capitalisation of software development costs'.
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 sales staff-related 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.
Other operating expenses comprise expenses of a secondary nature relative to the activities of the Group, including losses on the sale of intangible assets and property, plant and equipment.
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.
Financial income and expenses include interest income and expenses, realised and unrealised capital gains and losses on securities, realised and unrealised exchange gains and losses on foreign currency, amortization of financial assets and liabilities as well as surcharges and refunds under the Danish tax prepayment scheme, and changes related to the fair values of derivative financial instruments. 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.
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 prioryear taxable income are recognized in profit or loss for the year in other comprehensive income or directly in equity for any part relating to amounts recognized directly in equity.
The tax charge on share-based remuneration for the year is recognized in taxable income in the income statement. If the total tax charges exceed the total expenses then tax charge for the excess is deducted directly in equity.
SimCorp presents the statement of comprehensive income in two statements. An income statement and a statement of comprehensive income, showing profit for the year and income included in other total comprehensive income. Other comprehensive income includes foreign exchange adjustments related to translation differences from functional currency to presentation currency and the tax effect thereof.
BALANCE SHEET
Assets
On initial recognition, goodwill is recognized in the balance sheet at cost as described in 'Business combinations'. 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, which are as follows:
| Software up to | 5 years |
|---|---|
| ---------------- | --------- |
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.
Capitalised 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 capitalised, they are recognized as research and development costs in the income statement.
Property, plant and equipment are measured at historic cost less accumulated depreciation and impairment. 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 up to | 10 years |
|---|---|
| Technical equipment | 3 years |
| Other fixtures and fittings, | 5 years |
| tools and equipment |
Leasehold improvements are depreciated over the expected remaining term of the leases up to a maximum of 10 years.
The basis of depreciation is calculated with due consideration to scrap value and any prior impairment write down. 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.
Depreciation is recognized in the income statement as production costs, research and development costs, sales and distribution costs or administrative expenses.
Goodwill is tested for impairment annually by comparing the carrying values of the assets with their recoverable amounts. The carrying values of other non-current assets are reviewed annually for impairment, except for tax assets, to assess if there is an indication of depreciation beyond what is expressed through normal depreciation. 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.
Deferred tax assets are measured annually and only included to the extent it is likely that they will be realised.
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 unrealised 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 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.
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.
Receivables are measured at amortized 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.
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.
Treasury shares acquired by the parent company or subsidiaries are recognized at cost directly in equity under retained earnings. Gains on the sale of treasury shares are recognized directly in equity. Dividends in respect of treasury shares are recognized in equity under retained earnings. Proceeds from the sale of treasury shares or the issue of shares in SimCorp A/S in connection with the exercise of options or employee shares are taken directly to equity.
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 realisation of a net investment, foreign exchange adjustments are recognized in the income statement.
The Board of Directors, the Executive Management Board and the employees are covered by one or more incentive schemes. The most important terms and conditions of the schemes are disclosed in notes 6 and 7 to the financial statements.
For equity-settled stock options, the fair value is measured at the grant date and recognized in the income statement under staff costs 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. Regulations are recognized in the income statement under staff costs.
The fair value is measured using the Black-Scholes model using assumptions set out in note 7 to the financial statements.
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 costs. 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.
For restricted stock units, fair value is measured at the grant dates and recognized in the income statement as staff costs 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 only for changes in the number of employees estimated to become entitled to restricted stock units. The numbers of the restricted units are adjusted when conditions are only partly met and the adjustment is recognized in the income statement as staff costs.
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 expected pension assets and liabilities and their realised values are termed actuarial gains and losses. If the accumulated actuarial gains or losses at the beginning of a financial year exceed the higher numerical value of 10% of pension liabilities or 10% of the fair value of pension assets, the excess amount is recognized in the income statement over the expected average working lives of the covered employees in the company. Actuarial gains and losses that do not exceed the above limits are not recognized in the income statement or the balance sheet, but are disclosed in note 22 to the financial statements.
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. Any pension plan net asset is recognized only to the extent that it offsets unrecognized actuarial losses, will be received as future repay-
ments from the plan, or will result in reductions to future payments to the plan.
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.
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 amortisable for tax purposes.
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 realised, 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.
A provision is recognized when the Group has a legal or actual 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.
Obligations to re-establish and refurbish leased offices when the premises are vacated are recognized immediately at the estimated future costs.
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.
Other liabilities are measured at amortized cost.
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 operating activities are calculated as the profit for the year before tax, adjusted for non-cash operating items, changes in working capital, interest received and paid and income taxes paid.
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, receipts from or repayments of long-term liabilities, purchase or sale of treasury shares and distributions of dividends to shareholders.
Cash and cash equivalents comprise cash and bank deposits.
The Group develops and sells standard software and related services through a number of market units. Segment reporting reflects development activities and the market units in accordance with the internal management reporting for performance management and resource allocation. Information on these is disclosed in note 3 to the financial statements.
Note 3
SEGMENT DATA
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 capitalising of development cost, recognition of, inter alia, revenue, sales value of contracts in progress relating to professional services, receivables and deferred tax.
The estimates 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. Risk factors specific to the SimCorp Group are described in the management report on page 27 and the financial risks in note 29.
The notes to the financial statements contain information about the assumptions and uncertainty of estimates at the balance sheet date involving the risk of changes that could lead to adjustments of the carrying amounts of assets or liabilities within the upcoming financial year.
In applying the Group's accounting policies, in addition to estimations, management makes other judgments that may impact the amounts recognised in the annual accounts.
Such judgments include the timing of income recognition and whether leases should be treated as operating or finance leases.
| EUR'000 GROUP |
Nordic region |
Central Europe |
UK and Ireland |
Benelux and France |
Asia and Au stralia |
North America |
Product division |
Corpo rate functions |
Total | Elimina tion/not allocated |
Group |
|---|---|---|---|---|---|---|---|---|---|---|---|
| 2012 | |||||||||||
| Revenue | 51,593 | 64,641 | 15,075 | 27,869 | 18,932 | 29,688 | 1,279 | 113 | 209,190 | 0 | 209,190 |
| Revenue between segments | 5,542 | 4,925 | 2,653 | 3,800 | 3,107 | 3,233 | 69,856 | 430 | 93,546 | (93,546) | 0 |
| Total segment revenue | 57,135 | 69,566 | 17,728 | 31,669 | 22,039 | 32,921 | 71,135 | 543 | 302,736 | (93,546) | 209,190 |
| Segment profit from operations (EBIT) |
14,737 | 17,628 | (911) | 3,818 | 4,140 | (140) | 15,387 | (7,744) | 46,915 | 0 | 46,915 |
| Total assets | 14,719 | 22,955 | 4,029 | 14,376 | 11,035 | 12,883 | 3,247 | 3,174 | 86,418 | 39,373 | 125,791 |
| 2011 | |||||||||||
| Revenue | 49,806 | 64,534 | 17,365 | 28,897 | 12,726 | 20,258 | 1,205 | 24 | 194,815 | 0 | 194,815 |
| Total segment revenue 54,682 69,139 18,547 32,689 14,324 20,610 65,688 112 275,791 (80,976) Segment profit from 14,614 19,023 912 3,850 393 3,712 11,070 (7,234) 46,340 0 operations (EBIT) |
Total assets | 15,250 | 21,000 | 4,955 | 21,272 | 7,193 | 9,001 | 3,065 | 5,820 | 87,556 | 31,922 | 119,478 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 46,340 | ||||||||||||
| 194,815 | ||||||||||||
| Revenue between segments | 4,876 | 4,605 | 1,182 | 3,792 | 1,598 | 352 | 64,483 | 88 | 80,976 | (80,976) | 0 |
Revenue disclosures are based on SimCorp's market units and development activities while asset allocation is based on the physical location of the assets. Unallocated assets relate to non-current headquarter assets, cash, taxes and investments in associates.
Segment information is prepared in accordance with the Group's accounting policies.
Transactions between segments are made on market terms.
| EUR'000 | 2011 | 2012 |
|---|---|---|
| Reconciliation of the profit before tax | ||
| Total segment profit reported (EBIT) | 46,340 | 46,915 |
| Share of profit after tax in associates | 107 | 141 |
| Financial income | 2,610 | 2,006 |
| Financial expenses | 1,884 | 2,066 |
| Profit for the period before tax, see income statement | 47,173 | 46,996 |
| SEGMENT DATA | 2011 | 2011 | 2012 | 2012 |
|---|---|---|---|---|
| EUR'000 | Allocation | EUR'000 | Allocation | |
| Revenue allocation by country (significant) | ||||
| Germany | 42,522 | 22% | 38,508 | 18% |
| Denmark | 24,574 | 13% | 23,702 | 11% |
| Canada | 8,744 | 4% | 18,379 | 9% |
| Switzerland | 13,881 | 7% | 17,894 | 9% |
| Holland | 17,574 | 9% | 17,865 | 9% |
| USA | 13,393 | 7% | 12,518 | 6% |
| Sweden | 11,234 | 6% | 12,229 | 6% |
| Norway | 9,711 | 5% | 11,272 | 5% |
| England | 11,660 | 6% | 10,849 | 5% |
| France | 8,395 | 4% | 7,627 | 4% |
| Non-current assets allocation by country (significant) | ||||
| Denmark | 6,951 | 63% | 4,531 | 56% |
| England | 2,082 | 19% | 2,249 | 28% |
| 2011 | 2012 | 2011 | 2012 | |
|---|---|---|---|---|
| EUR'000 | EUR'000 | EUR'000 | EUR'000 | |
| 4 | REVENUE BY TYPE OF SERVICE | |||
| 23,215 | 23,070 | Licences 47,207 |
42,405 | |
| 10,357 | 12,244 | Professional services 57,003 |
66,060 | |
| 48,736 | 55,440 | Maintenance 88,581 |
98,149 | |
| 85 | 123 | Training activities etc. 2,024 |
2,576 | |
| 82,393 | 90,877 | Total 194,815 |
209,190 |
The SimCorp Group has no customers with revenue of more than 4% (2011: 4%) of total revenue.
| 2011 | 2012 | 2011 | 2012 | |
|---|---|---|---|---|
| EUR'000 | EUR'000 | EUR'000 | EUR'000 | |
| 5 | FUTURE REVENUE, RENTAL OF SOFTWARE | |||
| Rental of software | ||||
| 435 | 690 | Future revenue within 1 year 1,055 |
1,380 | |
| 383 | 1,684 | Future revenue within 2-5 years 1,088 |
3,368 | |
| 0 | 5 | Future revenue after 5 years 0 |
9 | |
| 818 | 2,379 | Total rental of software 2,143 |
4,757 |
Revenue from rental of software is based on agreements giving customers the right to use SimCorp's standard software over a limited period of time. The term of these agreements is typically five years, however may be up to eight years. Clients subsequently have an option to extend the rental period.
| PARENT COMPANY | GROUP | |||
|---|---|---|---|---|
| Note | 2011 | 2012 | 2011 | 2012 |
| EUR'000 | EUR'000 | EUR'000 | EUR'000 | |
| 6 | PERSONNEL EXPENSES | |||
| Staff costs: | ||||
| 45,856 | 46,985 | Wages and salaries 91,377 |
99,612 | |
| 0 | 0 | Defined contribution plans 1,235 |
1,222 | |
| 0 | 0 | Defined benefit plans 396 |
458 | |
| 1,565 | 2,535 | Share-based payment 1,565 |
2,535 | |
| 134 | 135 | Social security costs 6,532 |
7,660 | |
| 47,555 | 49,655 | 101,105 Total personnel expenses |
111,487 | |
| 459 | 461 | 1,048 Average number of employees |
1,075 |
| To CONTENTS | |||||
|---|---|---|---|---|---|
| -- | -- | -- | -- | -- | ------------- |
| PARENT COMPANY | GROUP | ||||
|---|---|---|---|---|---|
| Note | 2011 | 2012 | 2011 | 2012 | |
| EUR'000 | EUR'000 | EUR'000 | EUR'000 | ||
| Remuneration to parent company management: | |||||
| Board of Directors: | |||||
| 215 | 214 | Remuneration | 215 | 214 | |
| 18 | 34 | Other benefits | 18 | 34 | |
| 109 | 145 | Share-based payment | 109 | 145 | |
| 342 | 393 | Total remuneration to the Board of Directors | 342 | 393 | |
| Remuneration to members of the Executive Management Board: | |||||
| Klaus Holse: 2012 for the period September 1 to December 31 | |||||
| 179 | Salary | 179 | |||
| 14 | Other benefits | 14 | |||
| 29 | Performance-related bonus | 29 | |||
| 140 | Share-based payment | 140 | |||
| 362 | Total | 362 | |||
| Peter L. Ravn: * | |||||
| 415 | 422 | Salary | 415 | 422 | |
| 45 | 33 | Other benefits (2011: Including anniversary bonus) | 45 | 33 | |
| 65 | 46 | Performance-related bonus | 65 | 46 | |
| 137 | 180 | Share-based payment | 137 | 180 | |
| 662 | 681 | Total | 662 | 681 | |
| Torben Munch: 2012 for the period January 1 to September 30 | |||||
| 344 | 262 | Salary | 344 | 262 | |
| 18 | 68 | Other benefits (2012: Including vacation pay) | 18 | 68 | |
| 54 | 43 | Performance-related bonus | 54 | 43 | |
| 137 | (510) | Share-based payment (cancellations) | 137 | (510) | |
| 553 | (137) | Total | 553 | (137) | |
| Georg Hetrodt: | |||||
| 309 | 315 | Salary | 309 | 315 | |
| 18 | 15 | Other benefits | 18 | 15 | |
| 49 | 52 | Performance-related bonus | 49 | 52 | |
| 102 | 175 | Share-based payment | 102 | 175 | |
| 478 | 557 | Total | 478 | 557 | |
| Thomas Johansen: 2011 for the period April 1 to December 31 | |||||
| 200 | 294 | Salary | 200 | 294 | |
| 13 | 18 | Other benefits | 13 | 18 | |
| 33 | 49 | Performance-related bonus | 33 | 49 | |
| 40 | 107 | Share-based payment | 40 | 107 | |
| 286 | 468 | Total | 286 | 468 | |
| Shares | Shares | Shares | Shares | ||
| of DKK 10 | of DKK 10 | Restricted Stocks Units awarded to parent company management: | of DKK 10 | of DKK 10 | |
| 75 | 0 | Board of Directors** | 75 | 0 | |
| 6,012 | 17,880 | Executive Management Board | 6,012 | 17,880 | |
| 6,087 | 17,880 | Total restricted stocks awarded to parent company management | 6,087 | 17,880 | |
| Employee shares acquired by parent company management: | |||||
| 0 | 125 | Board of Directors** | 0 | 125 | |
| 0 | 962 | Executive Management Board | 0 | 962 | |
| 0 | 1,087 | Total number of employee shares acquired by parent company management | 0 | 1,087 | |
| Shares allotted to parent company management: | |||||
| 887 | 857 | Board of Directors*** | 887 | 857 | |
| 887 | 857 | Total number of shares allotted to parent company management | 887 | 857 | |
* Resigned from Excecutive Management Board August 31, 2012 and available to Board of Directors to January 1, 2013.
** Restricted stocks units and employee shares acquired in capacity as employees of SimCorp A/S.
*** Allotted as part of the remuneration of the Board of Directors.
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 programme. The bonus component will generally make up about 45% of the fixed remuneration. The value of the sharebased incentive programme, 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 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.
The remuneration is composed of a cash remuneration 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.
SHARE-BASED REMUNERATION 7
SimCorp's Board of Directors has adopted an overall policy for remuneration and incentive programs and the policy has been adopted by 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 sharebased remuneration. The Board of Directors also believes that it is a natural decision for a company such as 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 by the company in general meeting. The calculated value of such grants will be one third of the total Board remuneration at the time of grant.
Since 2000, the company has operated incentive programs for members of the Board of Directors, the Executive Management Board and the employees.
A total of 68,000 options at DKK 10 were granted to members of the Board of Directors, the Executive Management Board and the key employees in May 2007. 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. EUR 21 thousand was reversed to the income statement in respect of this program in the 2012 financial year. The remaining part of this program was cancelled in 2012.
A total of 71,180 options at DKK 10 were granted to members of the Executive Management Board and the key employees in April 2008 and additional 800 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 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. EUR 120 thousand (2011: charges of EUR 159 thousand) was reversed to the income statement in respect of this program in the 2012 financial year.
A total of 81,399 options at DKK 10 were granted to members of the Executive Management Board and 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. EUR 131 thousand (2011: EUR 353 thousand) was charged to the income statement in respect of this program in the 2012 financial year.
A total of 14,705 restricted stock units at DKK 10 each were granted to members of the Executive Management Board and key employees in April 2010 and an additional 255 restricted stock units at DKK 10 each were granted in connection with the appointment of three Senior Vice Presidents in the second half of 2010. The restricted stock units will vest after three years, 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 financial years 2010-2012. If the two last conditions are only partially satisfied, the undertaking with respect to the number of shares transferred after three years will be reduced, and may possibly lapse completely. EUR 280 thousand (2011: EUR 475 thousand) was charged to the income statement in respect of this program in the 2012 financial year.
A total of 16,214 restricted stock units at DKK 10 each were granted to members of the Executive Management Board and key employees in April 2011 and an additional 122 restricted stock units at DKK 10 each were granted in connection with the employment of a Senior Vice President in the second half of 2011. The restricted stock units will vest after three years, 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 financial years 2011-2013. If the two last conditions are only partially satisfied, the undertaking with respect to the number of shares transferred after three years will be reduced, and may possibly lapse completely. EUR 309 thousand (2011: EUR 424 thousand) was charged to the income statement in respect of this program in the 2012 financial year.
A total of 15,471 restricted stock units at DKK 10 each were granted to members of the Executive Management Board and key employees in April 2012. September 1, 2012 an additional 125 restricted stock units at DKK 10 each were granted in connection with the appointment of an Excecutive Vice President and furthermore 500 restricted stock units at DKK 10 each were granted to the CEO in January 2013. The restricted stock units will vest after three years, 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 financial years 2012-2014. If the two last conditions are only partially satisfied, the undertaking with respect to the number of shares transferred after three years will be reduced, and may possibly lapse completely. In addition on April 1, 2012, 1,500 restricted stock units of DKK 10 each were granted to a senior employee in North America. These restricted stock units will vest 50% after four years, and 50% 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. In addition, in connection with Klaus Holse's appointment as CEO 10,722 restricted stock units of DKK 10 each were granted to him on September 1, 2012 as Klaus Holse has completed his personal investment of DKK 5m in SimCorp shares. These restricted stock units will vest with 60% after three years, 20% after four years, and 20% after five years subject to continuing employment. EUR 609 thousand was charged to the income statement in respect of this program in the 2012 financial year.
The conditions for the short-term corporate incentive program 2010 for granting employee shares in 2011 were not met.
The company sold as part of its corporate bonus program on March 20, 2012 14,241 treasury shares at DKK 10 each to 340 employees of the parent company and its foreign subsidiaries. The price was DKK 373 per share, corresponding to 40% of the average market price from March 1 to March 5, 2012. EUR 446 thousand was charged to the income statement in connection with the program in the 2012 financial year. The employee shares are held in restricted accounts until March 15, 2015. Employees cannot sell or otherwise dispose of the shares during the period they are subject to selling restrictions.
The company granted as part of its corporate bonus program on March 20, 2012 3,570 restricted stock units at DKK 10 each to employees of the parent company and its foreign subsidiaries. The restricted stock units will vest on March 15, 2015, subject to continuing employment. EUR 125 thousand was charged to the income statement in respect of this program in the 2012 financial year.
The company will as part of its corporate bonus programme in March 2013 grant employee shares and restricted stock units to employees of the parent company and its foreign subsidiaries.The employee shares are held in restricted accounts until 15 March 2016. Likewise the restricted stock units will vest on March 15, 2016, subject to continuing employment. EUR 659 thousand was charged to the income statement in respect of this program in the 2012 financial year.
In 2011 the company allotted 887 treasury shares of DKK 10 to members of SimCorp's Board of Directors. In the financial year January 1 to December 31, 2011 EUR 109 thousand was charged to the income statement in respect of this program.
In 2012 the company allotted 857 treasury shares of DKK 10 to members of SimCorp's Board of Directors. In the financial year January 1 to December 31, 2012 EUR 139 thousand was charged to the income statement in respect of this program.
| Executive Manage |
Other | Avg. remain |
|||
|---|---|---|---|---|---|
| Board of | ment | employ | ing | ||
| Number of stock options of DKK 10 | Directors | Board | ees | Total | term |
| Total number of stock options issued, January 1, 2011 | |||||
| Purchase price 1200, exercise period Aug. 08 - Aug. 12 | 380 | 1,900 | 9,090 | 11,370 | 0.81 |
| Purchase price 1258, exercise period Aug. 09 - Aug. 12 | 570 | 2,850 | 13,610 | 17,030 | 0.81 |
| Purchase price 1315, exercise period Aug. 10 - Aug. 12 | 950 | 4,750 | 22,700 | 28,400 | 0.81 |
| Purchase price 1058, exercise period Aug. 09 - Aug. 13 | 100 | 2,120 | 10,550 | 12,770 | 1.31 |
| Purchase price 1108, exercise period Aug. 10 - Aug. 13 | 150 | 3,180 | 15,825 | 19,155 | 1.31 |
| Purchase price 1159, exercise period Aug. 11 - Aug. 13 | 250 | 5,300 | 26,375 | 31,925 | 1.63 |
| Purchase price 574, exercise period Aug. 10 - Aug. 14 | 0 | 2,332 | 5,800 | 8,132 | 1.81 |
| Purchase price 601, exercise period Aug. 11 - Aug. 14 | 150 | 4,100 | 19,270 | 23,520 | 2.13 |
| Purchase price 629, exercise period Aug. 12 - Aug. 14 | 250 | 6,834 | 32,117 | 39,201 | 2.63 |
| Total number of stock options at January 1, 2011 | 2,800 | 33,366 | 155,337 | 191,503 | 1.61 |
| Executive | Avg. | |||||
|---|---|---|---|---|---|---|
| Manage | Other | remain | ||||
| Board of | ment | employ | ing | |||
| Number of stock options of DKK 10 | Directors | Board | ees | Total | term | |
| Cancelled in 2011 | ||||||
| Purchase price 1058, exercise period Aug. 09 - Aug. 13 | 0 | 0 | (100) | (100) | ||
| Purchase price 1108, exercise period Aug. 10 - Aug. 13 | 0 | 0 | (150) | (150) | ||
| Purchase price 1159, exercise period Aug. 11 - Aug. 13 | 0 | 0 | (250) | (250) | ||
| Purchase price 574, exercise period Aug. 10 - Aug. 14 | 0 | 0 | (100) | (100) | ||
| Purchase price 601, exercise period Aug. 11 - Aug. 14 | 0 | 0 | (150) | (150) | ||
| Purchase price 629, exercise period Aug. 12 - Aug. 14 | 0 | 0 | (750) | (750) | ||
| Total number of stock options cancelled | 0 | 0 | (1,500) | (1,500) | ||
| Exercised in 2011 | ||||||
| Purchase price 574, exercise period Aug. 10 - Aug. 14 | 0 | 0 | (1,660) | (1,660) | ||
| Purchase price 601, exercise period Aug. 11 - Aug. 14 | (150) | (600) | (9,160) | (9,910) | ||
| Total stock options exercised | (150) | (600) | (10,820) | (11,570) | ||
| Transferred between categories in 2011 | ||||||
| Purchase price 1200, exercise period Aug. 08 - Aug. 12 | (80) | 0 | 80 | 0 | ||
| Purchase price 1258, exercise period Aug. 09 - Aug. 12 | (120) | 0 | 120 | 0 | ||
| Purchase price 1315, exercise period Aug. 10 - Aug. 12 | (200) | 0 | 200 | 0 | ||
| Total stock options | (400) | 0 | 400 | 0 | ||
| Total number of stock options issued, December 31, 2011 | ||||||
| Purchase price 1200, exercise period Aug. 08 - Aug. 12 | 300 | 1,900 | 9,170 | 11,370 | 0.31 | |
| Purchase price 1258, exercise period Aug. 09 - Aug. 12 | 450 | 2,850 | 13,730 | 17,030 | 0.31 | |
| Purchase price 1315, exercise period Aug. 10 - Aug. 12 | 750 | 4,750 | 22,900 | 28,400 | 0.31 | |
| Purchase price 1058, exercise period Aug. 09 - Aug. 13 | 100 | 2,120 | 10,450 | 12,670 | 0.81 | |
| Purchase price 1108, exercise period Aug. 10 - Aug. 13 | 150 | 3,180 | 15,675 | 19,005 | 0.81 | |
| Purchase price 1159, exercise period Aug. 11 - Aug. 13 | 250 | 5,300 | 26,125 | 31,675 | 0.81 | |
| Purchase price 574, exercise period Aug. 10 - Aug. 14 | 0 | 2,332 | 4,040 | 6,372 | 1.31 | |
| Purchase price 601, exercise period Aug. 11 - Aug. 14 | 0 | 3,500 | 9,960 | 13,460 | 1.31 | |
| Purchase price 629, exercise period Aug. 12 - Aug. 14 | 250 | 6,834 | 31,367 | 38,451 | 1.63 | |
| Total number of stock options at 31 December 2011 | 2,250 | 32,766 | 143,417 | 178,433 | 0.88 | |
| Cancelled in 2012 | ||||||
| Purchase price 1200, exercise period Aug. 08 - Aug. 12 | (220) | (1,900) | (9,250) | (11,370) | ||
| Purchase price 1258, exercise period Aug. 09 - Aug. 12 | (330) | (2,850) | (13,850) | (17,030) | ||
| Purchase price 1315, exercise period Aug. 10 - Aug. 12 | (550) | (4,750) | (23,100) | (28,400) | ||
| Purchase price 1058, exercise period Aug. 09 - Aug. 13 | 0 | 0 | (360) | (360) | ||
| Purchase price 1108, exercise period Aug. 10 - Aug. 13 | 0 | 0 | (540) | (540) | ||
| Purchase price 1159, exercise period Aug. 11 - Aug. 13 | 0 | 0 | (3,175) | (3,175) | ||
| Purchase price 629, exercise period Aug. 12 - Aug. 14 | 0 | 0 | (650) | (650) | ||
| Total number of stock options cancelled | (1,100) | (9,500) | (50,925) | (61,525) | ||
| Exercised in 2012 | ||||||
| Purchase price 1058, exercise period Aug. 09 - Aug. 13 | (100) | (300) | (6,386) | (6,786) | ||
| Purchase price 1108, exercise period Aug. 10 - Aug. 13 | (150) | (450) | (7,575) | (8,175) | ||
| Purchase price 1159, exercise period Aug. 11 - Aug. 13 | (250) | (750) | (6,850) | (7,850) | ||
| Purchase price 574, exercise period Aug. 10 - Aug. 14 | 0 | 0 | (4,106) | (4,106) | ||
| Purchase price 601, exercise period Aug. 11 - Aug. 14 | 0 | 0 | (9,460) | (9,460) | ||
| Purchase price 629, exercise period Aug. 12 - Aug. 14 | (250) | (1,000) | (25,134) | (26,384) | ||
| Total stock options exercised | (750) | (2,500) | (59,511) | (62,761) | ||
| Transferred between categories in 2012 | ||||||
| Purchase price 1200, exercise period Aug. 08 - Aug. 12 Purchase price 1258, exercise period Aug. 09 - Aug. 12 |
(80) (120) |
0 0 |
80 120 |
0 0 |
||
| Purchase price 1315, exercise period Aug. 10 - Aug. 12 | (200) | 0 | 200 | 0 | ||
| Purchase price 1058, exercise period Aug. 09 - Aug. 13 | 0 | (1,820) | 1,820 | 0 | ||
| Purchase price 1108, exercise period Aug. 10 - Aug. 13 | 0 | (2,730) | 2,730 | 0 | ||
| Purchase price 1159, exercise period Aug. 11 - Aug. 13 | 0 | (4,550) | 4,550 | 0 | ||
| Purchase price 574, exercise period Aug. 10 - Aug. 14 | 0 | (2,332) | 2,332 | 0 | ||
| Purchase price 601, exercise period Aug. 11 - Aug. 14 | 0 | (3,500) | 3,500 | 0 | ||
| Purchase price 629, exercise period Aug. 12 - Aug. 14 | 0 | (5,834) | 5,834 | 0 | ||
| Total stock options | (400) | (20,766) | 21,166 | 0 |
| Executive | Avg. | ||||
|---|---|---|---|---|---|
| Manage | Other | remain | |||
| Board of | ment | employ | ing | ||
| Number of stock options of DKK 10 | Directors | Board | ees | Total | term |
Total number of stock options issued, December 31, 2012
| Total number of stock options at December 31, 2012 | 0 | 0 | 54,147 | 54,147 | 0.48 |
|---|---|---|---|---|---|
| Purchase price 629, exercise period Aug. 12 - Aug. 14 | 0 | 0 | 11,417 | 11,417 | 0.81 |
| Purchase price 601, exercise period Aug. 11 - Aug. 14 | 0 | 0 | 4,000 | 4,000 | 0.81 |
| Purchase price 574, exercise period Aug. 10 - Aug. 14 | 0 | 0 | 2,266 | 2,266 | 0.81 |
| Purchase price 1159, exercise period Aug. 11 - Aug. 13 | 0 | 0 | 20,650 | 20,650 | 0.31 |
| Purchase price 1108, exercise period Aug. 10 - Aug. 13 | 0 | 0 | 10,290 | 10,290 | 0.31 |
| Purchase price 1058, exercise period Aug. 09 - Aug. 13 | 0 | 0 | 5,524 | 5,524 | 0.31 |
The table shows the number of shares and exercise prices.
The average market price at the time of exercise was DKK 1,051 (2011: DKK 850) per share of DKK 10.
| Executive | Fair value | Avg. | ||||
|---|---|---|---|---|---|---|
| Manage | Other | at time | remain | |||
| Board of | ment | employ | of grant | ing | ||
| Number of restricted stock units granted | Directors* | Board | ees | Total | (EURm) | term |
| Number of restricted stock units at DKK 10 | ||||||
| Total number of restricted stock units (April 2013) at January 1, 2011 | 86 | 4,524 | 9,893 | 14,503 | 2.25 | |
| Cancelled restricted stock unit April 1, 2013 | 0 | 0 | (349) | (349) | ||
| Total number of restricted stock units (April 2013) at December 31, 2011 | 86 | 4,524 | 9,544 | 14,154 | 1.25 | |
| Cancelled restricted stock unit April 1, 2013 | 0 | (1,508) | (340) | (1,848) | ||
| Reclassified restricted stock unit April 1, 2013 | 0 | (1,508) | 1,508 | 0 | ||
| Total number of restricted stock units (April 2013) at December 31, 2012 | 86 | 1,508 | 10,712 | 12,306 | 0.25 | |
| Number of restricted stock units at DKK 10 granted 2011 | ||||||
| Granted restricted stock units April 1, 2014 | 75 | 6,012 | 10,249 | 16,336 | 1.87 | |
| Cancelled restricted stock unit April 1, 2014 | 0 | 0 | (380) | (380) | ||
| Total number of restricted stock units (April 2014) at December 31, 2011 | 75 | 6,012 | 9,869 | 15,956 | 2.25 | |
| Cancelled restricted stock unit April 1, 2014 | 0 | (1,503) | (1,123) | (2,626) | ||
| Reclassified restricted stock unit April 1, 2014 | 0 | (1,503) | 1,503 | 0 | ||
| Total number of restricted stock units (April 2014) at December 31, 2012 | 75 | 3,006 | 10,249 | 13,330 | 1.25 | |
| Number of restricted stock units at DKK 10 granted 2012 | ||||||
| Granted restricted stock units April 1, 2015 | 0 | 6,420 | 9,676 | 16,096 | 2.08 | |
| Cancelled restricted stock unit April 1, 2015 | 0 | (1,480) | (1,222) | (2,702) | ||
| Reclassified restricted stock unit April 1, 2015 | 0 | (1,480) | 1,480 | 0 | ||
| Total number of restricted stock units (April 2015) at December 31, 2012 | 0 | 3,460 | 9,934 | 13,394 | 2.25 | |
| Number of restricted stock units at DKK 10 related to corporate bonus 2012 | ||||||
| Granted restricted stock units March 15, 2015 | 0 | 738 | 2,832 | 3,570 | 0.31 | |
| Cancelled restricted stock unit March 15, 2015 | 0 | (457) | (31) | (488) | ||
| Total number of restricted stock units (March 2015) at December 31, 2012 | 0 | 281 | 2,801 | 3,082 | 2.25 | |
| Number of restricted stock units at DKK 10 to a senior employee in North America | ||||||
| Granted restricted stock units April 1, 2016/2017 | 0 | 0 | 1,500 | 1,500 | 0.18 | |
| Total number of restricted stock units (March 2016/2017) at December 31, 2012 | 0 | 0 | 1,500 | 1,500 | 3.67 | |
| Number of restricted stock units at DKK 10 to the CEO | ||||||
| Granted restricted stock units September 1, 2015/2016/2017 | 0 | 10,722 | 0 | 10,722 | 1.39 | |
| Total number of restricted stock units (September 2015/2016/2017) at December 31, 2012 | 0 | 10,722 | 0 | 10,722 | 3.27 | |
| Total number of restricted stock units at December 31, 2012 | 161 | 18,977 | 35,196 | 54,334 | – |
* Restricted stock units acquired in capacity as employees of SimCorp A/S
The table shows the number of restricted stock units and the fair value at the time of grant.
EUR 2.5m (2011: EUR 1.6m) was charged to the income statement in respect of share-based payments in the 2012 financial year.
| PARENT COMPANY | GROUP | ||||
|---|---|---|---|---|---|
| Note | 2011 | 2012 | 2011 | 2012 | |
| EUR'000 | EUR'000 | EUR'000 | EUR'000 | ||
| 8 | AMORTIZATION AND DEPRECIATION | ||||
| Amortisation and depreciation for the year is recognised | |||||
| in the income statement as follows: | |||||
| 489 | 541 | Cost of sales | 1,072 | 888 | |
| 1,883 | 1,647 | Research and development costs | 1,948 | 1,763 | |
| 239 | 168 | Sales and distribution costs | 428 | 382 | |
| 596 | 646 | Administrative expenses | 611 | 702 | |
| 3,207 | 3,002 | Total amortization and depreciation | 4,059 | 3,735 | |
| Of which amortization of intangible assets: | |||||
| 41 | 78 | Cost of sales | 42 | 78 | |
| 612 | 470 | Research and development costs | 612 | 470 | |
| 23 | 25 | Sales and distribution costs | 23 | 26 | |
| 51 | 93 | Administrative expenses | 53 | 98 | |
| 727 | 666 | Total amortization of intangible assets | 730 | 672 | |
| 9 | FEES TO INDEPENDENT AUDITORS | ||||
| Audit fees | |||||
| 130 | 134 | KPMG | 308 | 308 | |
| 38 | 39 | PricewaterhouseCoopers | 57 | 39 | |
| 168 | 173 | Total audit fees | 365 | 347 | |
| Other service with assurance fees | |||||
| 0 | 0 | KPMG | 4 | 29 | |
| 0 | 0 | PricewaterhouseCoopers | 0 | 4 | |
| 0 | 0 | Total other service with assurance fees | 4 | 33 | |
| Tax and VAT advice fees | |||||
| 87 | 33 | KPMG | 99 | 51 | |
| 9 | 100 | PricewaterhouseCoopers | 12 | 196 | |
| 96 | 133 | Total Tax and VAT advice fees | 111 | 247 | |
| Other service fees | |||||
| 68 | 197 | KPMG | 82 | 235 | |
| 20 | 1 | PricewaterhouseCoopers | 24 | 37 | |
| 88 | 198 | Total other service fees | 106 | 272 |
| PARENT COMPANY | GROUP | ||||
|---|---|---|---|---|---|
| Note | 2011 | 2012 | 2011 | 2012 | |
| EUR'000 | EUR'000 | EUR'000 | EUR'000 | ||
| 10 | INVESTMENTS IN ASSOCIATES | ||||
| 865 | 866 | Cost at January 1 | 865 | 866 | |
| 1 | (3) | Foreign exchange adjustment | 1 | (3) | |
| 0 | (8) | Disposals | 0 | (8) | |
| 866 | 855 | Cost at December 31 | 866 | 855 | |
| 0 | 0 | Adjustments at January 1 | 255 | 348 | |
| 0 | 0 | Foreign exchange adjustment | (6) | 20 | |
| 0 | 0 | Share of profit for the year | 107 | 141 | |
| 0 | 0 | Dilution of ownership | (8) | 0 | |
| 0 | 0 | Adjustments at December 31 | 348 | 509 | |
| 866 | 855 | Carrying amount at December 31 | 1,214 | 1,364 |
| 2011 | 2012 | 2011 | 2012 |
|---|---|---|---|
| EUR'000 | EUR'000 | EUR'000 | EUR'000 |
| RECEIVABLES FROM ASSOCIATES | |||
| 158 | 60 | Cost at January 1 158 |
60 |
| (98) | (60) | Disposals (98) |
(60) |
| 60 | 0 | Cost at December 31 60 |
0 |
| 60 | 0 | 60 Carrying amount at December 31 |
0 |
| EUR'000 | Share attributable to the SimCorp Group |
|||||||
|---|---|---|---|---|---|---|---|---|
| Country of | Ownership | Profit for | Total | Profit for | ||||
| Name | incorporation | interest | Revenue | the period | assets | Liabilities | Equity | the year |
| 2011 | ||||||||
| Dyalog Ltd. | UK | 23.3% | 2,128 | 195 | 2,291 | 606 | 57 | |
| Equipos Ltd. | UK | 20.0% | 4,769 | 198 | 1,823 | 1,049 | 50 | |
| 1,214 | 107 | |||||||
| 2012 | ||||||||
| Dyalog Ltd. | UK | 19.9% | 2,357 | 265 | 2,665 | 485 | 65 | |
| Equipos Ltd. | UK | 20.0% | 6,680 | 405 | 2,894 | 1,758 | 76 | |
| 1,364 | 141 |
Investments in associates are measured in the consolidated balance sheet according to the equity method. Investments in associates are measured at cost or recoverable amount in the parent company's balance sheet.
The disposal relates to Dyalog Ltd. which have brought back treasury shares in 2012 and cancelled the shares.
The dilution relates to Dyalog Ltd. which issued employee shares in 2011.
| PARENT COMPANY | GROUP | |||
|---|---|---|---|---|
| Note | 2011 | 2012 | 2011 | 2012 |
| EUR'000 | EUR'000 | EUR'000 | EUR'000 | |
| 11 | FINANCIAL INCOME | |||
| 24,272 | 24,443 | Dividend from subsidiaries – |
– | |
| 367 | 241 | Interest income, subsidiaries – |
– | |
| 598 | 434 | Interest income, cash etc. 672 |
615 | |
| 1 | 0 | Interest income, associates 1 |
0 | |
| 1,339 | 0 | Fair value adjustments, derivates 1,339 |
0 | |
| 0 | 600 | Foreign exchange gains 0 |
600 | |
| 590 | 770 | Foreign exchange adjustments 598 |
791 | |
| 27,167 | 26,488 | Total financial income 2,610 |
2,006 |
| GROUP | |||
|---|---|---|---|
| Note | 2011 | 2012 | |
| 14 | EARNINGS PER SHARE | ||
| Profit for the year (EUR´000) | 33,956 | 34,474 | |
| Average number of shares at DKK 1 | 46,000,000 | 45,469,945 | |
| Average number of treasury shares at DKK 1 | (1,892,921) | (2,390,378) | |
| Average number of shares at DKK 1 in circulation | 44,107,079 | 43,079,567 | |
| Average dilutive impact of outstanding stock options at DKK 1 | 174,402 | 39,033 | |
| Average dilutive impact of outstanding restricted stock units at DKK 1 | 236,884 | 455,193 | |
| Average number of diluted shares at DKK 1 in circulation | 44,518,365 | 43,573,793 | |
| Basic earnings per share at DKK 1 – EPS (EUR) | 0.77 | 0.80 | |
| Diluted earnings per share at DKK 1 – EPS-D (EUR) | 0.76 | 0.79 |
The dilutive effect of 5,213 restricted stock units of DKK 10 each, equivalent to 52,130 shares of DKK 1 each (2011: 3,006 restricted stock units of DKK 10 each, equivalent to 30,060 shares of DKK 1 each), was not included as the conditions stipulated in note 7 are only expected to be partly met. They could potentially dilute earnings per share in the future. Likewise in 2011 120,150 stock options of DKK 10 each, equivalent to 1,201,500 shares of DKK 1 each were out-of-the-money and not included in the calculation of diluted earnings per share. See also the Management report concerning share-based remuneration on pages 36–37.
INTANGIBLE ASSETS AND PROPERTY, PLANT AND EQUIPMENT 15
| PARENT COMPANY | Acquired software |
Intangible total |
Leasehold improve ment |
Technical equipment |
Equipment, fixtures and fittings |
Property, plant and equip ment total |
|---|---|---|---|---|---|---|
| Cost at January 1, 2011 | 6,153 | 6,153 | 3,699 | 4,542 | 3,357 | 11,598 |
| Foreign exchange adjustment | 17 | 17 | 10 | 12 | 9 | 31 |
| Additions | 561 | 561 | 0 | 1,905 | 15 | 1,920 |
| Disposals | 0 | 0 | 0 | (388) | (52) | (440) |
| Cost at December 31, 2011 | 6,731 | 6,731 | 3,709 | 6,071 | 3,329 | 13,109 |
| Depreciation at January 1, 2011 | 4,939 | 4,939 | 1,040 | 2,608 | 1,467 | 5,115 |
| Foreign exchange adjustment | 16 | 16 | 3 | 12 | 4 | 19 |
| Depreciation | 727 | 727 | 381 | 1,422 | 677 | 2,480 |
| Disposals | 0 | 0 | 0 | (387) | (20) | (407) |
| Depreciation at December 31, 2011 | 5,682 | 5,682 | 1,424 | 3,655 | 2,128 | 7,207 |
| Carrying amount at December 31, 2011 | 1,049 | 1,049 | 2,285 | 2,416 | 1,201 | 5,902 |
| Cost at January 1, 2012 | 6,731 | 6,731 | 3,709 | 6,071 | 3,329 | 13,109 |
| Foreign exchange adjustment | (24) | (24) | (13) | (21) | (12) | (46) |
| Additions | 144 | 144 | 100 | 357 | 0 | 457 |
| Disposals | 0 | 0 | 0 | (66) | 0 | (66) |
| Cost at December 31, 2012 | 6,851 | 6,851 | 3,796 | 6,341 | 3,317 | 13,454 |
| Depreciation at January 1, 2012 | 5,682 | 5,682 | 1,424 | 3,655 | 2,128 | 7,207 |
| Foreign exchange adjustment | (24) | (24) | (4) | (18) | (7) | (29) |
| Depreciation | 666 | 666 | 335 | 1,375 | 626 | 2,336 |
| Disposals | 0 | 0 | 0 | (64) | 0 | (64) |
| Depreciation at December 31, 2012 | 6,324 | 6,324 | 1,755 | 4,948 | 2,747 | 9,450 |
| Carrying amount at December 31, 2012 | 527 | 527 | 2,041 | 1,393 | 570 | 4,004 |
| Depreciation period | Up to 5 years | Up to 10 years | 3 years | 5 years |
EUR'000
| INTANGIBLE ASSETS AND PROPERTY, PLANT AND EQUIPMENT | EUR'000 | ||||||
|---|---|---|---|---|---|---|---|
| Leasehold | Equipment, | Property, plant | |||||
| Acquired | Intangible | improve | Technical | fixtures and | and equip | ||
| GROUP | Goodwill | software | total | ment | equipment | fittings | ment total |
| Cost at January 1, 2011 | 796 | 5,540 | 6,336 | 6,332 | 5,212 | 4,982 | 16,526 |
| Foreign exchange adjustment | 112 | 17 | 129 | 54 | 27 | 30 | 111 |
| Additions | 0 | 561 | 561 | 141 | 2,103 | 154 | 2,398 |
| Disposals | 0 | 0 | 0 | 0 | (451) | (115) | (566) |
| Cost at December 31, 2011 | 908 | 6,118 | 7,026 | 6,527 | 6,891 | 5,051 | 18,469 |
| Amortisation/depreciation at January 1, 2011 | 0 | 4,318 | 4,318 | 2,465 | 2,828 | 2,454 | 7,747 |
| Foreign exchange adjustment | 0 | 16 | 16 | 33 | 19 | 18 | 70 |
| Amortisation/depreciation | 0 | 730 | 730 | 754 | 1,611 | 964 | 3,329 |
| Disposals | 0 | 0 | 0 | 0 | (449) | (41) | (490) |
| Amortisation/depreciation at December 31, 2011 | 0 | 5,064 | 5,064 | 3,252 | 4,009 | 3,395 | 10,656 |
| Carrying amount at December 31, 2011 | 908 | 1,054 | 1,962 | 3,275 | 2,882 | 1,656 | 7,813 |
| Cost at January 1, 2012 | 908 | 6,118 | 7,026 | 6,527 | 6,891 | 5,051 | 18,469 |
| Foreign exchange adjustment | (33) | (23) | (56) | (10) | (21) | (13) | (44) |
| Additions | 0 | 242 | 242 | 132 | 395 | 31 | 558 |
| Disposals | 0 | 0 | 0 | (78) | (97) | (32) | (207) |
| Cost at December 31, 2012 | 875 | 6,337 | 7,212 | 6,571 | 7,168 | 5,037 | 18,776 |
| Amortisation/depreciation at January 1, 2012 | 0 | 5,064 | 5,064 | 3,252 | 4,009 | 3,395 | 10,656 |
| Foreign exchange adjustment | 0 | (22) | (22) | 3 | 35 | (6) | 32 |
| Amortisation/depreciation | 0 | 672 | 672 | 660 | 1,559 | 844 | 3,063 |
| Disposals | 0 | 0 | 0 | (61) | (95) | (32) | (188) |
| Amortisation/depreciation at December 31, 2012 | 0 | 5,714 | 5,714 | 3,854 | 5,508 | 4,201 | 13,563 |
| Carrying amount at December 31, 2012 | 875 | 623 | 1,498 | 2,717 | 1,660 | 836 | 5,213 |
| Amortisation/depreciation period | Up to 5 years | Up to 10 years | 3 years | 5 years |
INTANGIBLE ASSETS AND PROPERTY, PLANT AND EQUIPMENT
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.
As at December 31, 2012, management performed an impairment test of the carrying amount of goodwill in SimCorp Asia Pty. Ltd. of AUD 0.3m (2011: AUD 0.3m) and SimCorp Development Centre UK Limited of GBP 0.5m (2011: GBP 0.5m).
The recoverable amount, calculated as the present value of expected future cash flows based on the companies' plans for 2013 as approved by management, the expected revenue and cost performance for the next years related to SimCorp Dimension for SimCorp Asia Pty. Ltd. and FIX.Net for SimCorp Development Centre UK Limited, is assessed to be adequate to offset the carrying amount of goodwill as at December 31, 2012. A discount rate of 9.5% (2011: 9.5%) p.a before tax, consisting of a risk free interest rate of 3.8% (2011: 3.9%), a risk premium of 5.5% (2011: 5.0%) and a Beta of 1.1 (2011: 1.2) is used according to market evaluation of comparable companies.
Sensitivity analyses show that discount rates can be increased with up to 5% (2011: 5%) points, without resulting in impairment of goodwill.
The additions in software 2012 and 2011 are primarily related to purchase for use in operation.
| Note | 2011 | 2012 | |
|---|---|---|---|
| EUR'000 | EUR'000 | ||
| 16 | INVESTMENTS IN SUBSIDIARIES | ||
| 7,950 | 9,313 | Cost at January 1 | |
| 22 | (32) | Foreign exchange adjustment | |
| 1,341 | 15,178 | Additions | |
| 9,313 | 24,459 | Cost at December 31 | |
| 9,313 | 24,459 | Carrying amount at December 31 | |
| 24,272 | 24,443 | Dividends paid | |
| RECEIVABLES FROM SUBSIDIARIES | |||
| 12,239 | 11,445 | Cost at January 1 | |
| 216 | (386) | Foreign exchange adjustment | |
| 1,197 | 0 | Additions | |
| (2,207) | (8,611) | Disposals | |
| 11,445 | 2,448 | Cost at December 31 | |
| 11,445 | 2,448 | Carrying amount at December 31 |
The addition, investments in subsidiaries, 2012 relates to SimCorp Canada Inc., SimCorp France S.A.S. and SimCorp USA Inc.and in 2011 to SimCorp Hong Kong Ltd. There are no ownership changes in the Group's subsidiaries.
The disposals, receivables from subsidiaries, are related to conversion of debt to sharecapital for SimCorp USA Inc. and to repayment of loan for SimCorp USA Inc.
| Ownership | |||
|---|---|---|---|
| interest | Share | ||
| Name | Registered office | in 2012 | capital |
| SimCorp Ltd. | London, United Kingdom | 100% | 100 T GBP |
| SimCorp GmbH | Bad Homburg, Germany | 100% | 102 T EUR |
| SimCorp Österreich GmbH | Vienna, Austria | 100% | 18 T EUR |
| SimCorp Norge AS | Oslo, Norway | 100% | 1,000 T NOK |
| SimCorp Sverige AB | Stockholm, Sweden | 100% | 100 T SEK |
| SimCorp Benelux SA/NV | Brussels, Belgium | 100% | 62 T EUR |
| SimCorp USA Inc. | New York, USA | 100% | 7,010 T USD |
| SimCorp Schweiz AG | Zurich, Switzerland | 100% | 100 T CHF |
| SimCorp Asia Pty. Ltd. | Sydney, Australia | 100% | 1,000 T AUD |
| SimCorp Singapore Pte. Ltd. | Singapore, Singapore | 100% | 1 SGD |
| SimCorp Development Centre UK Limited | Shenfield, United Kingdom | 100% | 200 GBP |
| SimCorp Ukraine LLC | Kiev, Ukraine | 100% | 2,968 T UAH |
| SimCorp Canada Inc. | Vancouver, Canada | 100% | 3,000 T CAD |
| SimCorp France S.A.S. | Paris, France | 100% | 500 T EUR |
| SimCorp Hong Kong Ltd. | Hong Kong, China | 100% | 14,000 T HKD |
| SimCorp Luxembourg S.A. | Luxembourg, Luxembourg | 100% | 31 T EUR |
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
The name of Solutionforge Limited has in 2011 been changed to SimCorp Development Centre UK Limited.
| PARENT COMPANY | GROUP | ||||
|---|---|---|---|---|---|
| Note | 2011 | 2012 | 2011 | 2012 | |
| EUR'000 | EUR'000 | EUR'000 | EUR'000 | ||
| 17 | DEPOSITS | ||||
| 1,692 | 1,743 | Cost at January 1 | 1,969 | 2,062 | |
| 4 | (6) | Foreign exchange adjustment | 8 | (1) | |
| 54 | 40 | Additions | 105 | 74 | |
| (7) | (10) | Disposals | (20) | (40) | |
| 1,743 | 1,767 | Carrying amount at December 31 | 2,062 | 2,095 | |
| 18 | DEFERRED TAX | ||||
| (641) | (791) | Deferred tax at 1 January | (5,163) | (3,485) | |
| 5 | 4 | Foreign exchange adjustment | 321 | 12 | |
| (3) | (194) | Prior-year adjustment, profit | 333 | 2 | |
| (149) | (658) | Adjustment of deferred tax, profit for the year | 994 | (1,769) | |
| (3) | (61) | Adjustment of deferred tax, equity | (3) | (61) | |
| 0 | 0 | Adjustment of tax rate | 33 | 29 | |
| (791) | (1,700) | Deferred tax at December 31 | (3,485) | (5,272) | |
| Deferred tax recognised in the balance sheet as follows: | |||||
| 791 | 1,700 | Deferred tax (asset) | 3,897 | 5,680 | |
| 0 | 0 | Deferred tax (liability) | 412 | 408 | |
| (791) | (1,700) | Net deferred tax at December 31 | (3,485) | (5,272) | |
| Deferred tax (asset) | |||||
| (262) | (132) | Intangible assets | (262) | (132) | |
| 221 | 415 | Property, plant and equipment | 510 | 727 | |
| 0 | 0 | Current assets | (100) | (53) | |
| 316 | 336 | Provisions | 808 | 763 | |
| 44 | 44 | Current liabilities | 308 | 354 | |
| 472 | 1,037 | Share-based remuneration | 472 | 1,037 | |
| 0 | 0 | Tax losses carry-forward | 2,161 | 2,984 | |
| 791 | 1,700 | Deferred tax (asset) at December 31 | 3,897 | 5,680 | |
| Deferred tax (liability) | |||||
| 0 | 0 | Property, plant and equipment | (122) | 0 | |
| 0 | 0 | Current assets | 540 | 0 | |
| 0 | 0 | Provisions | (5) | 408 | |
| 0 | 0 | Current liabilities | (1) | 0 | |
| 0 | 0 | Deferred tax (liability) at December 31 | 412 | 408 |
Tax value of the capitalised tax losses are expected to be realised within a few years, as the affected subsidiaries expect a positive taxable income going forward. In 2013 EUR 1.4m (2011: for 2012 EUR 1.7m) is expected to be utilised. SimCorp France S.A.S and SimCorp Canda Inc. have recently started operations and have not yet paid taxes.
Deferred tax asset, EUR 47 thousand have not been recognised in the balance sheet in respect of increased depreciation of 115% on property, plant and equipment.
| CHANGES IN TEMPORARY DIFFERENCES DURING THE YEAR | |||||
|---|---|---|---|---|---|
| Foreign | Recognised | ||||
| EUR'000 | Balance | exchange | in profit | Recognised | Balance |
| GROUP | January 1 | adjustment | and loss | in equity | December 31 |
| 2011 | |||||
| Intangible assets | (303) | 3 | 38 | 0 | (262) |
| Tangible assets | 402 | (23) | 253 | 0 | 632 |
| Current assets | (141) | 13 | (512) | 0 | (640) |
| Provisions | 621 | (30) | 222 | 0 | 813 |
| Current liabilities | 1,238 | (106) | (823) | 0 | 309 |
| Share-based remuneration | 554 | (5) | (80) | 3 | 472 |
| Tax losses carry-forward | 2,792 | (173) | (458) | 0 | 2,161 |
| 5,163 | (321) | (1,360) | 3 | 3,485 | |
| 2012 | |||||
| Intangible assets | (262) | 1 | 129 | 0 | (132) |
| Tangible assets | 632 | (1) | 96 | 0 | 727 |
| Current assets | (640) | 2 | 585 | 0 | (53) |
| Provisions | 813 | (1) | (457) | 0 | 355 |
| Current liabilities | 309 | (9) | 54 | 0 | 354 |
| Share-based remuneration | 472 | (2) | 506 | 61 | 1,037 |
| Tax losses carry-forward | 2,161 | (2) | 825 | 0 | 2,984 |
| 3,485 | (12) | 1,738 | 61 | 5,272 |
| PARENT COMPANY | GROUP | ||||
|---|---|---|---|---|---|
| Note | 2011 | 2012 | 2011 | 2012 | |
| EUR'000 | EUR'000 | EUR'000 | EUR'000 | ||
| 19 | RECEIVABLES | ||||
| 3,115 | 2,343 | Receivables from customers | 27,256 | 26,687 | |
| 20,677 | 13,758 | Receivables from subsidiaries | – | – | |
| 1,742 | 2,439 | Accrued revenue | 17,190 | 18,195 | |
| 2,457 | 810 | Other receivables | 3,380 | 1,242 | |
| 27,991 | 19,350 | Total receivables at December 31 | 47,826 | 46,124 | |
| The aging of trade receivables from customers was at 31 December: | |||||
| 2,233 | 2,155 | Not due | 20,651 | 22,071 | |
| 743 | 96 | Not more than 30 days | 5,326 | 3,554 | |
| 139 | 20 | More than 30 days but not more than 90 days | 1,155 | 449 | |
| 0 | 72 | More than 90 days | 124 | 613 | |
| 3,115 | 2,343 | Total | 27,256 | 26,687 |
Accrued revenue consists mainly of revenue from sale of software licences 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 writedown has been made in 2012 and 2011 for trade receivables.
The Group's exposure to currency and credit risk for trade receivables is disclosed in note 29.
20
| EQUITY, TREASURY SHARES AND DIVIDEND | ||||
|---|---|---|---|---|
| Number of | Number of | Nominal | Nominal | |
| Share capital | shares | shares | value | value |
| of DKK 1 | of DKK 1 | EUR'000 | EUR'000 | |
| 2011 | 2012 | 2011 | 2012 | |
| At January 1 | 46,000,000 | 46,000,000 | 6,179 | 6,179 |
| Cancellation of treasury shares | 0 | (1,000,000) | 0 | (134) |
| At December 31 | 46,000,000 | 45,000,000 | 6,179 | 6,045 |
At December 31, 2012, the share capital amounted to DKK 45,000,000 divided into 45,000,000 shares of DKK 1 nominal value each (2011: DKK 46,000.000 divided into 46,000,000 shares of DKK 1 nominal) after cancelling of 1.000.000 treasury shares of DKK 1 nominal value each. The company's shares are traded on NASDAQ OMX Copenhagen in unchanged denominations of 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 10,000,000 (10,000,000 shares of DKK 1 nominal value each) 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 March 1, 2013, 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.
| Number of | Number of | Acquisition | Acquisition | |||
|---|---|---|---|---|---|---|
| Treasury shares | shares | shares | value | value | Percent of | Percent of |
| of DKK 1 | of DKK 1 | EUR'000 | EUR'000 | share capital | share capital | |
| 2011 | 2012 | 2011 | 2012 | 2011 | 2012 | |
| At January 1 | 1,483,600 | 2,452,560 | 15,338 | 27,371 | 3.2 | 5.3 |
| Foreign exchange adjustment | – | – | 31 | (96) | – | – |
| Purchases | 1,093,460 | 1,770,170 | 13,195 | 25,518 | 2.4 | 3.9 |
| Cancellation | 0 | (1,000,000) | 0 | (10,065) | 0.0 | (2.2) |
| Delivery of shares/options exercised | (124,500) | (636,300) | (1,193) | (7,690) | (0.3) | (1.3) |
| Sold to employees | 0 | (142,410) | 0 | (1,590) | 0.0 | (0.3) |
| At December 31 | 2,452,560 | 2,444,020 | 27,371 | 33,448 | 5.3 | 5.4 |
The market value of treasury shares at December 31, 2012 was EUR 41.4m (2011: EUR 28.9m). The shares are carried at EUR 0.0m in the financial statements. The Board of Directors has been authorised 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.
SimCorp A/S acquired 1,770,170 treasury shares of DKK 1 at an average price of DKK 1,075.48 per share of DKK 10 equal to a purchase price of EUR 25.5m in 2012 (2011:1,093,460 treasury shares of DKK 1 at an average price of DKK 897.01 per share of DKK 10 equal to a purchase price of EUR 13.2m). In addition, SimCorp A/S in 2012 disposed of treasury shares in relation to the sale of shares to employees under the employee share program, for a nominal value of DKK 142,410 share of DKK 1 at a calculated market price of DKK 1,012.94 per share of DKK 10, equal to a calculated selling price of EUR 1.9m (2011: none). The company has delivered shares in connection with exercise of options for a nominal value of DKK 636,300 shares of DKK 1 (2011: DKK 124,500 shares of DKK 1) calculated at an average market price of DKK 1,150.65 per share of DKK 10 (2011: DKK 850.06 per share of DKK 10), equal to a selling price of EUR 9.8m (2011: EUR 1.4m). The proceeds of the sale totalled EUR 7.4m (2011: EUR 0.9m).
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 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 annual general meeting that dividends of EUR 20.0m (2011: EUR 17.6m), equal to DKK 35.00 (2011: DKK 30.00) per 10 shares, be distributed and that the company be authorized to acquire treasure shares for up to 10% of the company's share capital. Further, the Board of Directors intends to recommend to the shareholders at annual general meeting that the authorization to increase the share capital with up to DKK 5,000,000 (5,000,000 of DKK 1 nominal value each) as per the Articles of Association, section 4, be extended to March 1, 2017.
| PROVISIONS | EUR'000 | ||
|---|---|---|---|
| Reestablishment | |||
| costs for | Anniversary | ||
| PARENT COMPANY | rented premises | bonuses | Total |
| 2011 | |||
| Liability at January 1 | 757 | 425 | 1,182 |
| Foreign exchange adjustment | 2 | 1 | |
| Used during the year | 0 | (49) | (49) |
| Reversal of unused liabilities | 0 | (12) | (12) |
| Provisions for the year | 38 | 102 | 140 |
| Total provisions | 797 | 467 | 1,264 |
| Expected due dates for provisions: | |||
| Falling due within 1 year | 0 | 34 | |
| Falling due within 2 to 5 years | 0 | 102 | 102 |
| Falling due after 5 years | 797 | 331 | 1,128 |
| Total provisions | 797 | 467 | 1,264 |
| 2012 | |||
| Liability at January 1 | 797 | 467 | 1,264 |
| Foreign exchange adjustment | (3) | (2) | (5) |
| Used during the year | 0 | (31) | (31) |
| Reversal of unused liabilities | 0 | (47) | (47) |
| Provisions for the year | 40 | 124 | 164 |
| Total provisions | 834 | 511 | 1,345 |
| Expected due dates for provisions: | |||
| Falling due within 1 year | 0 | 48 | |
| Falling due within 2 to 5 years | 0 | 62 | |
| Falling due after 5 years | 834 | 401 | 1,235 |
| Total provisions | 834 | 511 | 1,345 |
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.
When the Group has an obligation to restore leasehold premises on expiry of the lease, a provision corresponding to the present value of the expected future expenses is recognised.
| PROVISIONS | EUR'000 | ||||
|---|---|---|---|---|---|
| Reestablishment | |||||
| costs for | Anniversary | ||||
| GROUP | rented premises | bonuses | Pension | Other | Total |
| 2011 | |||||
| Liability at January 1 | 1,170 | 573 | 591 | 51 | 2,385 |
| Foreign exchange adjustment | 8 | 5 | 14 | 0 | 27 |
| Used during the year | (13) | (49) | 0 | (51) | (113) |
| Reversal of unused liabilities | 0 | (12) | 0 | 0 | (12) |
| Provisions for the year | 151 | 159 | 84 | 79 | 473 |
| Total provisions | 1,316 | 676 | 689 | 79 | 2,760 |
| Expected due dates for provisions: | |||||
| Falling due within 1 year | 0 | 124 | 0 | 73 | 197 |
| Falling due within 2 to 5 years | 334 | 221 | 0 | 6 | 561 |
| Falling due after 5 years | 982 | 331 | 689 | 0 | 2,002 |
| Total provisions | 1,316 | 676 | 689 | 79 | 2,760 |
| 2012 | |||||
| Liability at January 1 | 1,316 | 676 | 689 | 79 | 2,760 |
| Foreign exchange adjustment | 1 | (1) | 10 | 0 | 10 |
| Used during the year | 0 | (31) | 0 | 0 | (31) |
| Reversal of unused liabilities | (91) | (47) | (42) | 0 | (180) |
| Provisions for the year | 52 | 445 | 22 | (79) | 440 |
| Total provisions | 1,278 | 1,042 | 679 | 0 | 2,999 |
| Expected due dates for provisions: | |||||
| Falling due within 1 year | 0 | 95 | 0 | 0 | 95 |
| Falling due within 2 to 5 years | 247 | 380 | 0 | 0 | 627 |
| Falling due after 5 years | 1,031 | 567 | 679 | 0 | 2,277 |
| Total provisions | 1,278 | 1,042 | 679 | 0 | 2,999 |
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.
When the Group has an obligation to restore leasehold premises on expiry of the lease, a provision corresponding to the present value of the expected future expenses is recognised.
See note 22 regarding pension obligations.
PENSIONS AND SIMILAR LIABILITIES 22
The Danish and certain foreign companies' pension obligations are covered by insurance (defined contribution plans).
Foreign companies' pension obligations not or only partly covered by insurance (defined benefit plans) are recognised in accordance with IAS 19.
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 or the like. For a defined contribution plan, the Group runs no risk in respect of future developments in interest rates, inflation, mortality or disability.
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.
| GROUP | ||
|---|---|---|
| 2011 | 2012 | |
| EUR'000 | EUR'000 | |
| Charged to the income statement | ||
| Contributions for current financial year | 1,235 | 1,222 |
| Defined benefit plans: | ||
| Expenses related to current financial year | 385 | 421 |
| Interest expenses | 147 | 120 |
| Recognised actuarial gains | (143) | (115) |
| Amortisation of accumulated actuarial gain/loss | 7 | 32 |
| 396 | 458 | |
| Charged to the income statement, total | 1,631 | 1,680 |
| Liability recognised in respect of defined benefit plans: | ||
| At January 1 | 4,342 | 4,710 |
| Foreign exchange adjustment | 78 | 137 |
| Participants contribution | 120 | 141 |
| Expensed in the income statement | 385 | 421 |
| Interest expenses | 147 | 120 |
| Actuarial loss/(gain) | (237) | (512) |
| Payroll taxes | (24) | (42) |
| Benefits paid | (101) | (114) |
| Liabilities at December 31 | 4,710 | 4,861 |
| Recognised value of plan assets: | ||
| At January 1 | 3,367 | 3,256 |
| Foreign exchange adjustment | 59 | |
| Expected return of plan assets | 143 | 115 |
| Actuarial gain/(loss) | (621) | (214) |
| Participants contribution | 120 | 141 |
| Employer contribution | 289 | 437 |
| Benefits paid | (101) | (114) |
| Assets at December 31 | 3,256 | 3,703 |
| Specification of recognised net liabilities: | ||
| Present value of defined benefit plan | 4,710 | 4,861 |
| Fair value of plan assets | (3,256) | (3,703) |
| Unrecognised actuarial loss | (765) | (479) |
| Net liability before limitation of assets ceiling | 689 | 679 |
| Net liability after limitation of asset ceiling | 689 | 679 |
| Actual return on plan assets | (478) | (99) |
| Assumptions for actuarial calculations at the balance sheet date were as follows: | ||
| Average discount rate | 2.5–2.6% | 1.9–3.8% |
| Expected return on plan assets | 3.5–4.1% | 3.1–3.8% |
| Future salary increases | 2.2–3.5% | 2.0–3.5% |
| Expected pension increases | 0.1% | 0.1–0.2% |
| Increase in social benefit contributions | 3.3% | 3.3% |
The expense is recognised in the following income statement items:
| GROUP | |||
|---|---|---|---|
| 2011 | 2012 | ||
| EUR'000 | EUR'000 | ||
| Administrative expenses | 409 | 214 | |
| Research and development costs | 54 | 69 | |
| Cost of sales | 922 | 1,129 | |
| Sales and distribution costs | 246 | 268 | |
| Total | 1,631 | 1,680 | |
| Asset allocation at December 31 | |||
| Shares | 6% | 2% | |
| Bonds | 7% | 8% | |
| Mortgage bonds | 13% | 14% | |
| Property | 6% | 6% | |
| Insurance policies * | 61% | 60% | |
| Other financial assets | 7% | 10% | |
| Total | 100% | 100% |
The Group's Norwegian and Swiss subsidiaries have pension plans comprisinging a total of 32 employees (2011: 29). The plans entitle the employees to defined future benefits. These principally depend on the number of years of service, salary level at retirement age and the size of the national pension. The obligations are funded through insurance companies and actuarially calculated.
The expected return on the plan has been calculated by Storebrand Pensjonstjenester AS (Norway) on the basis of standardized assumptions, prepared by Forsikringsnæringens Hovedorganisasjon (Norway), regarding life expectancy and other demographic factors. Specifically the tariff K1963 has been applied.
The expected return on the Swiss plan has been calculated by Allea Ltd (Switzerland) on the basis of standardized assumptions, prepared by Swiss Association of Actuaries, regarding life expectancy and other demographic factors.
The calculations have been made on the basis of exact ages and employment dates. Up to the age of 51 years, a resignation rate of 8% is assumed. After that age, the resignation rate is assumed to be 0%.
The Group expects to pay EUR 417 thousand (2011: EUR 291 thousand for the year 2012) to the defined benefit pension plan in 2013.
The Group's pension liability for the current and preceding financial years is as follows:
| GROUP | |||||
|---|---|---|---|---|---|
| 2008 | 2009 | 2010* | 2011 | 2012 | |
| EUR'000 | EUR'000 | EUR'000 | EUR'000 | EUR'000 | |
| Actuarial calculation of pension liabilities | (1,568) | (1,514) | (4,342) | (4,710) | (4,861) |
| Plan assets | 948 | 1,174 | 3,367 | 3,256 | 3,703 |
| Overfunding/underfunding | (620) | (340) | (975) | (1,454) | (1,158) |
| Experience adjustment, assets | (158) | (165) | 166 | (621) | (214) |
| Experience adjustment, liability (actuarial gain/loss) | 84 | (608) | (202) | (237) | (512) |
* Swiss pension plan included from 2010.
| PARENT COMPANY | GROUP | ||||
|---|---|---|---|---|---|
| Note | 2011 | 2012 | 2011 | 2012 | |
| EUR'000 | EUR'000 | EUR'000 | EUR'000 | ||
| 23 | TRADE PAYABLES AND OTHER PAYABLES | ||||
| 2,753 | 2,756 | Trade payables | 5,796 | 5,731 | |
| 15,594 | 14,985 | Debt to subsidiaries | – | – | |
| 6,833 | 7,387 | Due holiday pay | 8,641 | 9,435 | |
| 3,655 | 2,841 | Wages and commissions payable | 8,402 | 7,951 | |
| 54 | 59 | Payroll taxes, VAT etc., payable | 4,814 | 6,038 | |
| 28,889 | 28,028 | Total trade payables and other payables | 27,653 | 29,155 |
The Group's exposure to currency and liquidity risk for trade payables and other payables is disclosed in note 29.
| PARENT COMPANY | GROUP | ||||
|---|---|---|---|---|---|
| Note | 2011 | 2012 | 2011 | 2012 | |
| EUR'000 | EUR'000 | EUR'000 | EUR'000 | ||
| 24 | INCOME TAX | ||||
| (222) | (912) | Payable at January 1 | 2,395 | (911) | |
| 1 | 0 | Foreign exchange adjustment | (16) | 55 | |
| (716) | 192 | Prior-year adjustments | (185) | 138 | |
| 2,826 | 3,755 | Current tax on profit for the year | 12,152 | 14,125 | |
| 122 | (163) | Tax on equity items | 122 | (163) | |
| (2,923) | (3,818) | Income tax paid | (15,379) | (11,864) | |
| (912) | (946) | Total payable income tax, net | (911) | 1,380 | |
| Which is distributed as follows: | |||||
| 912 | 946 | Income tax receivable | 3,326 | 1,335 | |
| 0 | 0 | Income tax payable | 2,415 | 2,715 | |
| (912) | (946) | Total payable income tax, net | (911) | 1,380 | |
| 25 | CONTRACTS IN PROGRESS RELATING TO | ||||
| PROFESSIONAL SERVICES | |||||
| 0 | 0 | Income recognised sales value of contracts in progress | 616 | 1,460 | |
| 0 | 0 | Payments received on account | (580) | (1,837) | |
| 0 | 0 | Contracts in progress | 36 | (377) | |
| Which are recognised as follows: | |||||
| 0 | 0 | Contracts in progress relating to professional services (assets) | 188 | 410 | |
| 0 | 0 | Contracts in progress relating to professional services (liabilities) | (152) | (787) | |
| 0 | 0 | Contracts in progress | 36 | (377) |
Contracts in progress relating to professional services are recognised in accrued revenue, see note 19.
| PARENT COMPANY | GROUP | ||||
|---|---|---|---|---|---|
| Note | 2011 | 2012 | 2011 | 2012 | |
| EUR'000 | EUR'000 | EUR'000 | EUR'000 | ||
| 26 | OPERATING LEASES | ||||
| Rent commitments | |||||
| 6,455 | 5,497 | Payable within 1 year | 9,942 | 9,028 | |
| 22,099 | 20,104 | Payable within 2 to 5 years | 29,066 | 27,367 | |
| 8,370 | 3,618 | Payable after 5 years | 9,667 | 6,446 | |
| 36,924 | 29,219 | Rent commitments until expiry of minimum term of tenancy | 48,675 | 42,841 | |
| Other commitments | |||||
| 130 | 101 | Payable within 1 year | 540 | 540 | |
| 133 | 68 | Payable within 2 to 5 years | 594 | 548 | |
| 263 | 169 | Total other commitments | 1,134 | 1,088 | |
| Total commitments | |||||
| 6,585 | 5,598 | Payable within 1 year | 10,482 | 9,568 | |
| 22,232 | 20,172 | Payable within 2 to 5 years | 29,660 | 27,915 | |
| 8,370 | 3,618 | Payable after 5 years | 9,667 | 6,446 | |
| 37,187 | 29,388 | Total commitments | 49,809 | 43,929 |
Amounts of EUR 9.3m (2011: EUR 10.2m) relating to operating leases in the Group and EUR 5.3m (2011: EUR 6.2m) in the parent company have been recognised in the income statement for 2012. 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. The lease is non-terminable 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.
CONTINGENT LIABILITIES 27
In some contracts, as part of building long-term customer 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 customers for a total of EUR 19.3m (2011: EUR 24.6m).
The parent company has issued letters of support to certain subsidiaries.
Bank guarantees have been provided for rent commitments in Australia, Belgium, France, Luxembourg, Germany, USA and Austria.
The Group is a party to inquiries from authorities when investigating various issues. The outcome of such is not expected to have significant effect on profit for the year and the assessment of the Group's financial position.
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 16 and 10, in which SimCorp A/S has a controlling or significant influence.
The Group did not enter into any agreement, deals or other transactions in 2012 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 6.
| PARENT COMPANY | GROUP | ||
|---|---|---|---|
| 2011 | 2012 | 2011 | 2012 |
| EUR'000 | EUR'000 | EUR'000 | EUR'000 |
| Subsidiaries and associates Trading with subsidiaries and associates has involved the following: |
|||
| 16,046 | 17,497 | Purchases of services from subsidiaries – |
– |
| 836 | 749 | Purchases of services from associates 836 |
754 |
| 72,008 | 80,229 | 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 notes 16 and 10. Loans account for a total of EUR 2.4m (2011: EUR 11.5m) of the outstanding balances with subsidiaries. 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 customers and suppliers.
Trading with subsidiaries and associates of the SimCorp Group is conducted on arm's length terms. Ownership interests appear from notes 16 and 10.
Interest on outstanding balances with subsidiaries and associates is specified in notes 11 and 12.
The parent company has in 2012 received dividends of EUR 24.4m (2011: EUR 24.3m) from subsidiaries.
No dividend has been received from associates.
The parent company has provided delivery bonds to certain customers of its subsidiaries, and the parent company has issued letters of support to certain subsidiaries, see note 27.
| 2011 | ||
|---|---|---|
| Numbers | Numbers | |
| of DKK 10 | of DKK 10 | |
| The interests in the company of members of the board of Directors and | ||
| the Executive Management Board are listed below: | ||
| Shareholdings by members of the Board of Directors and the Executive Management Board: | ||
| Board of Directors: | ||
| Jesper Brandgaard | 7,647 | |
| Peter Schütze | – | |
| Herve Couturier | 463 | |
| Simon Jeffreys | 580 | |
| Carl Christian Ægidius resigned March 31, 2012 | 1,596 | |
| Jacob Goltermann | 1,423 | |
| Raymond John | 314 | |
| Board of Directors, total | 12,023 | 11,387 |
| Executive Management Board: | ||
| Klaus Holse | – | |
| Peter L. Ravn resigned August 31, 2012 | 23,450 | |
| Torben B. Munch resigned August 24, 2012 | 10,864 | |
| Georg Hetrodt | 8,441 | |
| Thomas Johansen | 175 | |
| Executive Management Board, total | 42,930 | 15,027 |
| Total shareholdings by members of the Board of Directors and the Executive Management Board | 54,953 | 26,414 |
| Restricted stock units granted to members of the Board of Directors and the Executive Management Board: | ||
| Board of Directors: | ||
| Jacob Goltermann | 161 | |
| Board of Directors, total | 161 | |
| Executive Management Board: | ||
| Klaus Holse | – | 11,222 |
| Peter L. Ravn resigned August 31, 2012 | 3,011 | |
| Torben B. Munch resigned August 24, 2012 | 3,011 | |
| Georg Hetrodt | 3,011 | |
| Thomas Johansen | 1,503 | |
| Executive Management Board, total | 10,536 | 18,977 |
| Total restricted stock units granted to members of the Board of Directors and the Executive Management Board | 10,697 | 19,138 |
| Stock options held by members of the Board of Directors and the Executive Management Board: | ||
| Board of Directors: | ||
| Jesper Brandgaard | 600 | |
| Carl Christian Ægidius | 400 | |
| Jacob Goltermann | 1,250 | |
| Board of Directors, total | 2,250 | |
| Executive Management Board: | ||
| Peter L. Ravn resigned August 31, 2012 | 14,383 | |
| Torben B. Munch resigned August 24, 2012 | 14,383 | |
| Georg Hetrodt | 4,000 | |
| Executive Management Board, total | 32,766 |
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 6.
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 three years. Election will be held in February/March 2013.
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 Parent Company's Finance department according to policies committed to writing and approved by the Board of Directors.
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 practise.
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 page 27 ff of the report.
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 minimise its net exposure in individual currencies. At the balance sheet date, SimCorp A/S had financially hedged CHF 6.5m (2011: CHF 14m) relating to future short-term investments of liquidity from a subsidiary.
Currency exposures of investments in subsidiaries have not been hedged. The related exchange rate adjustments are recognised 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.
| Currency | Cash/equivalents | Receivables | Debt | Net position |
|---|---|---|---|---|
| The parent company's currency risks recognised | ||||
| in the balance sheet at December 31, 2011: | ||||
| DKK | 33,771 | 10,998 | 15,150 | 29,619 |
| SEK | 1 | 6 | 159 | (152) |
| NOK | 1 | 0 | 3,024 | (3,023) |
| EUR | 2,819 | 17,668 | 5,981 | 14,506 |
| GBP | 18 | 752 | 1,655 | (885) |
| CHF | 958 | 0 | 13,048 | (12,090) |
| USD | 68 | 0 | 404 | (336) |
| AUD | 0 | 0 | 2,667 | (2,667) |
| SGD | 0 | 0 | 182 | (182) |
| CAD | 0 | 1,003 | 0 | 1,003 |
| HKD | 0 | 1,685 | 0 | 1,685 |
| UAH | 0 | 0 | 239 | (239) |
| 37,636 | 32,112 | 42,509 | 27,239 |
| in the balance sheet at December 31, 2012: | |
|---|---|
| -------------------------------------------- | -- |
| DKK | 41,770 | 8,872 | 15,002 | 35,640 |
|---|---|---|---|---|
| SEK | 1 | 0 | 108 | (107) |
| NOK | 0 | 0 | 1,136 | (1,136) |
| EUR | 1,753 | 7,394 | 8,987 | 160 |
| GBP | 13 | 254 | 1,861 | (1,594) |
| CHF | 0 | 0 | 5,877 | (5,877) |
| USD | 0 | 1,198 | 71 | 1,127 |
| AUD | 0 | 0 | 1,894 | (1,894) |
| SGD | 0 | 2,572 | 0 | 2,572 |
| CAD | 19 | 3,763 | 0 | 3,782 |
| HKD | 0 | 853 | 0 | 853 |
| UAH | 0 | 0 | 567 | (567) |
| 43,556 | 24,906 | 35,503 | 32,959 |
| EUR'000 | ||||
|---|---|---|---|---|
| Currency | Cash/equivalents | Receivables | Debt | Net position |
| The Group's currency risks recognised | ||||
| in the balance sheet at December 31, 2011: | ||||
| EUR/DKK | 2,818 | 431 | 93 | 3,156 |
| EUR/CHF | 23 | 0 | 0 | 23 |
| CHF/DKK | 958 | 0 | 11,517 | (10,559) |
| GBP/DKK | 18 | 0 | 146 | (128) |
| USD/DKK | 68 | 0 | 4 | 64 |
| USD/GBP | 0 | 395 | 0 | 395 |
| USD/HKD | 0 | 2,227 | 0 | 2,227 |
| CAD/USD | 169 | 458 | 0 | 627 |
| The Group's currency risks recognised | ||||
| in the balance sheet at December 31, 2012: | ||||
| EUR/DKK | 1,753 | 2,264 | 60 | 3,957 |
| EUR/CHF | 763 | 0 | 0 | 763 |
| EUR/GBP | 0 | 16 | 0 | 16 |
| CHF/DKK | 0 | 0 | 5,381 | (5,381) |
| GBP/DKK | 13 | 0 | 0 | 13 |
| USD/SGD | 0 | 4,553 | 0 | 4,553 |
| USD/DKK | 0 | 14 | 71 | (57) |
| USD/GBP | 23 | 86 | 0 | 109 |
| USD/HKD | 0 | 1,361 | 0 | 1,361 |
| CAD/USD | 441 | 766 | 0 | 1,207 |
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:
| Impact on net position | |||||
|---|---|---|---|---|---|
| 2011 | 2012 | ||||
| Change in exchange rate |
EUR'000 | Change in exchange rate |
EUR'000 | ||
| PARENT COMPANY | |||||
| SEK | 10% | (15) | 10% | (11) | |
| NOK | 10% | (302) | 10% | (114) | |
| GBP | 10% | (89) | 10% | (159) | |
| CHF | 10% | (1,209) | 5% | (294) | |
| USD | 20% | (67) | 10% | 113 | |
| AUD | 15% | (400) | 10% | (189) | |
| SGD | 15% | (27) | 10% | 257 | |
| CAD | 15% | 150 | 10% | 378 | |
| HKD | 20% | 337 | 10% | 85 | |
| UAH | 10% | (24) | 10% | (57) | |
| Change in | Change in | ||||
| cross rate | EUR'000 | cross rate | EUR'000 | ||
| GROUP | |||||
| EUR/CHF | 10% | 2 | 5% | 38 | |
| CHF/DKK | 10% | (1,056) | 5% | (269) | |
| GBP/DKK | 10% | (13) | 10% | 1 | |
| USD/DKK | 20% | 13 | 10% | (6) | |
| USD/GBP | 10% | 40 | 5% | 5 | |
| USD/HKD | 5% | 111 | 5% | 68 | |
| USD/SGD | 0% | 0 | 10% | 455 | |
| CAD/USD | 15% | 94 | 5% | 60 |
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 leves, 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 43.6m at December 31, 2012 (2011: EUR 37.6m) 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 -0.6-1.4% in 2012 (2011: 0.3-1.4%) for significant deposits.
Part of the Parent Company's cash is placed on time deposits of up to 6 months, carrying fixed interest rates.
The Group had bank deposits of EUR 58.9m at December 31, 2012 (2011: EUR 48.1m) 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 -0.6-1.4% in 2012 (2011: 0.3-1.4%) for significant deposits.
The Group had no long-term loans except for EUR 0.75m bonds issued to the employees in SimCorp A/S. The bonds mature end of 2014 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 very little 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 2012 and 2011, respectively, would have a positive profit impact of EUR 0.44m (2011: EUR 0.38m) in the parent company and of EUR 0.59m (2011: EUR 0.48m) in the Group. A corresponding fall in interest rates would have the 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 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, treasury shares and unutilised 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 7.7m (2011: EUR 7.7m).
The following table indicates when the current and non-current liablities including interest per December 31, 2012 and December 31, 2011, respectively, are expected to fall due:
| Current | Non-current | |||||||
|---|---|---|---|---|---|---|---|---|
| At December 31 | Within 6 | Within 6 | 6–12 | 6–12 | 1–5 | 1–5 | Later than | Later than |
| EUR'000 | months | months | months | months | years | years | 5 years | 5 years |
| PARENT COMPANY | 2011 | 2012 | 2011 | 2012 | 2011 | 2012 | 2011 | 2012 |
| Prepayments from customers | 81 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Trade payables | 2,744 | 2,731 | 9 | 25 | 0 | 0 | 0 | 0 |
| Provisions | 6 | 29 | 28 | 19 | 102 | 62 | 1,128 | 1,235 |
| Other payables | 6,121 | 5,558 | 3,262 | 3,489 | 1,159 | 1,240 | 0 | 0 |
| Bonds | 0 | 0 | 15 | 15 | 788 | 764 | 0 | 0 |
| Payables to subsidiaries | 15,750 | 15,135 | 0 | 0 | 0 | 0 | 0 | 0 |
| Total | 24,702 | 23,453 | 3,314 | 3,548 | 2,049 | 2,066 | 1,128 | 1,235 |
| GROUP | ||||||||
| Prepayments from customers | 1,605 | 2,699 | 691 | 280 | 0 | 922 | 0 | 0 |
| Trade payables | 5,205 | 5,517 | 157 | 171 | 434 | 43 | 0 | 0 |
| Provisions | 115 | 60 | 82 | 35 | 561 | 627 | 2,002 | 2,277 |
| Other payables | 17,052 | 18,234 | 3,608 | 3,746 | 1,197 | 1,444 | 0 | 0 |
| Income tax and deferred tax | 1,886 | 1,875 | 941 | 840 | 0 | 408 | 0 | 0 |
| Bonds | 0 | 0 | 15 | 15 | 788 | 764 | 0 | 0 |
| Total | 25,863 | 28,385 | 5,494 | 5,087 | 2,980 | 4,208 | 2,002 | 2,277 |
Financial liabilities are classified as 'Financial liabilities measured at amortized cost' in the balance sheet.
The fair value of the bonds essentially equals their carrying amount.
Interest payments are estimated based on current market conditions.
The maturity profile of the Group's operational leasing obligations appears from note 26.
Financial assets and liabilities are recognised at the trading day.
The Group is not exposed to significant risks concerning individual customers or business partners. Customers are generally major investment managers in the financial sector. Under the Group's policy for assuming credit risk all major customers and other business partners are assessed prior to any contract being signed and a substantial amount is paid on entering into licence agreements.
The maximum exposure to credit risk equals the carrying amounts:
| PARENT COMPANY | GROUP | ||
|---|---|---|---|
| 2011 | 2012 | 2011 | 2012 |
| EUR'000 | EUR'000 | EUR'000 | EUR'000 |
| 37,636 | 43,556 | Cash and cash equivalents 48,149 |
58,897 |
| 27,991 | 19,350 | Receivables 47,826 |
46,124 |
| 65,627 | 62,906 | Maximum credit exposure 95,975 |
105,021 |
Financial assets are classified as 'Loans and receivables' and 'Derivative financial instruments at fair value via income statement' in the balance sheet.
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 recognised international banks with high credit ratings. No security has been received.
The table shows trade receivables by credit quality categorised by geographic regions:
| PARENT COMPANY | GROUP | ||
|---|---|---|---|
| 2011 | 2012 | 2011 | 2012 |
| EUR'000 | EUR'000 | EUR'000 | EUR'000 |
| 3,115 | 2,332 | Europe 22,379 |
16,902 |
| 0 | 11 | North America 3,860 |
7,008 |
| 0 | 0 | Asia 167 |
1,909 |
| 0 | 0 | Australia 519 |
838 |
| 0 | 0 | Other 331 |
30 |
| 3,115 | 2,343 | Total 27,256 |
26,687 |
The Group's trade receivables at December 31, 2012 include no impairments (2011: 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 customer represents more than 6.4% (2011: 11%) of total trade receivables.
The parent company and Group have the following financial instruments:
| 2011 | 2012 | 2011 | 2012 |
|---|---|---|---|
| EUR'000 | EUR'000 | EUR'000 | EUR'000 |
| 74,675 | 62,915 | Loan and receivables 92,655 |
86,826 |
| 1,253 | 569 | Derivate at fair value via income statement 1,253 |
569 |
| (19,105) | (18,490) | Financial obligations measured at amortized cost (6,554) |
(6,480) |
SimCorp measures derivative financial instruments, comprising forward exchange transactions for the sale of CHF 6.5m (2011: CHF 14m) against DKK in the period from February 2013 to August 2013 at fair value. The fair value is determined using generally accepted valuation techniques based on observable exchange rates and yield curves.
The forward exchange contracts are included in level 2 (observable input), EUR 0.6m (2011: EUR 1.3m).
30 EVENTS AFTER THE BALANCE SHEET DATE
No material events have occurred after December 31, 2012, that have consequences for the annual report 2012.
The following changes to existing and new standards as well as interpretation have been publish but are not applicacable for the preparation of the 2012 Annual Report: IFRIC 20, IFRS 9-13, adjustments to IFRS 10, 11 and 12, IAS 19 (2011), 27 (2011) and 28 (2011), adjustments to IFRS 1 and 7, amendments to IAS 1 and 32 and amendments to IFRSs (2009-2011).
IFRS 9, adjustments to IFRS 10, 11, 12 and IAS 27 (2011) and amendments to IFRSs (2009-2011) is not yet approved by the EU.
The SimCorp Group expects to implement the new accounting standards in connection with the reporting for 2013, or when they take effect.
IAS 19 changes the treatment of defined benefit plans and the corridor approach for measuring actuarial gains or losses. The SimCorp Group expects that this standard will have minor impact on the Group. At December 31, 2012 the actuarial loss is EUR 479 thousand. The standard is applicable for reporting year beginning Januar 1, 2013.
Other changes or interpretation are not expected to have any monetary effect on the statements of the SimCorp Group's results, assets and liabilities or the equity in connection with their taking effect.
| PARENT COMPANY | GROUP | |||
|---|---|---|---|---|
| Note | 2011 | 2012 | 2011 | 2012 |
| EUR'000 | EUR'000 | EUR'000 | EUR'000 | |
| 32 | ADJUSTMENTS, CASH FLOW | |||
| 3,207 | 3,002 | Depreciation 4,059 |
3,735 | |
| – | – | Share of profit in associates (107) |
(141) | |
| (27,167) | (26,488) | Financial income (2,610) |
(2,006) | |
| 1,822 | 1,843 | Financial expenses 1,884 |
2,066 | |
| 1,967 | 3,095 | Tax on profit for the year 13,217 |
12,522 | |
| 2,445 | 2,532 | Other 2,445 |
2,532 | |
| (17,726) | (16,016) | 18,888 Total adjustments |
18,708 |
From left to right: Raymond John, Simon Jeffreys, Peter Schütze, Jacob Goltermann, Hervé Couturier and Jesper Brandgaard
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 since 2007. 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: 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 Nordea-fonden, and member of the Board of Directors of Axcel and Gösta Enboms Fond.
Independence 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, and member of the Board of Directors of AVEVA Group plc since 2010.
Executive Vice President in Amadeus S.A.S. Is regarded as independent.
The composition of the Board of Directors ensures its ability to act as an efficient, visionary and result-oriented dialogue partner for SimCorp's Executive Management Board, independent of any special interests, just as it reflects diversity in terms of age and international experience, among other characteristics. The Board of Directors has defined an ideal profile for the Board's composition. The ideal profile reflects the Board competences that are considered important for supporting SimCorp's strategic development, and it describes business and financial skills as well as industry insight and professional qualifications. Thus, it is considered important that the Board includes experience in managing an international business and experience in strategic and business development within SimCorp's industry. The ideal profile focuses specifically on experience in managing a listed company with foreign subsidiaries, knowledge of relevant legislation and specialised accounting and audit knowledge. Other qualifications described in the ideal profile include knowhow relating to IT, software product development, development process management, service business and managing highly specialised employees. The company believes that the Board of Directors as a collective body meets the ideal profile and equally complies with the requirements to act as an audit committee under section 31 of the Danish Financial Statements Act.
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, FCA, CPA.
Member of SimCorp A/S' Board of Directors since 2011. Director and Chairman of the audit committee of the Board of Directors of Henderson International Income Trust since 2010. Member of the Board of Directors of Aon Limited, Wellcome Trust Finance plc., Genome Research Ltd, MSD Wellcome Trust Hilleman Laboratories Pvt. Ltd. (India), Diamond Light Source Ltd.
Chief Operating Officer of the Wellcome Trust. 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.).
Directorships Employee-elected member of SimCorp A/S' Board of Directors since 2007.
Independence Chief Business Consultant in SimCorp A/S. Is not regarded as independent due to employment with 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)
Directorships
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.
From left to right: Georg Hetrodt, Klaus Holse and Thomas Johansen
Born 1961 Chief Executive Officer Present position held since 2012 Member of the Board of Directors of CBS Copenhagen Business School and The Scandinavian Golf Club
Born 1970 Chief Financial Officer, Executive Vice President Present position held since 2011
Born 1966 Chief Technology Officer, Executive Vice President Present position held since 2009 Chairman of the Board of Directors of Dyalog Ltd., member of the Board of Directors of Equipos Ltd.
Klaus Andersen
Arnt Eilertsen Peter Hill Troels Philip Jensen David Kubersky Ralf Schmücker
Klaus Andersen Born 1964 Senior Vice President SimCorp Ltd. Present position held since 2008 Arnt Eilertsen Born 1960 Senior Vice President SimCorp Nordic Present position held since 2001 Peter Hill Born 1955 Senior Vice President SimCorp Asia Present position held since 2006 Troels Philip Jensen Born 1967 Senior Vice President SimCorp Western Europe Present position held since 2000 David Kubersky Born 1966 Senior Vice President SimCorp North America Present position held since 2008 Ralf Schmücker Born 1968 Senior Vice President SimCorp Central Europe Present position held since 2012
Karin van Goinga
Middelburg
Jochen Müller Born 1966 Executive Vice President SimCorp EMEAP Present position held since 2012
Lars Bjørn Falkenberg David Kubersky
Jochen Müller
Lars Bjørn Falkenberg Born 1969 Senior Vice President Group Marketing & Communications Present position held since 2010 David Kubersky Born 1966 Senior Vice President SimCorp North America Present position held since 2008 Karin van Goinga Middelburg Born 1969 Senior Vice President Corporate HC Present position held since 2011
Weidekampsgade 16 2300 Copenhagen S. Denmark Phone +45 35 44 88 00 Fax +45 35 44 88 11
Sergelgatan 1 111 57 Stockholm Sweden Phone +46 8 528 015 00 Fax +46 8 528 015 15
Biskop Gunnerusgate 14A 0185 Oslo Norway Phone +47 23 10 41 00 Fax +47 23 10 41 49
(Finnish branch of SimCorp Sverige AB) Salomonkatu 17 00100 Helsinki Finland Phone +358 9685 2010 Fax +358 9685 2012
V. Stusa 35–37 2nd floor Kiev Ukraine Phone +380 44 495 86 00 Fax +380 44 495 86 11
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
Sihlquai 253 8005 Zurich Switzerland Phone +41 44 360 59 00 Fax +41 44 360 59 01
Building Stéphanie 1 Avenue Louise 54 1050 Brussels Belgium Phone +32 2 213 30 00 Fax +32 2 213 30 01
(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
29/31 rue Saint-Augustin 75002 Paris France Phone +33 1 5535 5454 Fax +33 1 5535 5455
20, rue Eugène Ruppert 2453 Luxembourg Luxembourg Phone +32 2 213 30 00 Fax +32 2 213 30 01
2nd floor 100 Wood Street London EC2V 7AN United Kingdom Phone +44 20 7260 1900 Fax +44 20 7260 1911
Alexander Lane, Shenfield Essex CM15 8QF United Kingdom Phone +44 1277 312300 Fax +44 1277 848727
17 State Street New York, NY 10004 USA Phone +1 212 994 9400 Fax +1 212 994 8826
1999 Avenue of the Stars Suite 1100 Los Angeles, CA 90067 USA Phone +1 424 354 5151 Fax +1 424 354 5150
401 Bay Street Suite 1600 Toronto, Ontario M5H 2Y4 Canada Phone +1 647 591 9200 Fax +1 647 591 9201
Level 13, 68 Pitt Street Sydney NSW 2000 Australia Phone +61 2 9241 4222 Fax +61 2 9221 5100
21st Floor The Center 99 Queen's Road Central Hong Kong Phone +852 2521 2680 Fax +852 2887 2711
www.simcorp.com
| 1/2013 | 7 January 2013 | SimCorp A/S – Share Buyback Programme |
|---|---|---|
| 2/2013 | 14 January 2013 | SimCorp A/S – Share Buyback Programme |
| 3/2013 | 21 January 2013 | SimCorp A/S – Share Buyback Programme |
| 4/2013 | 28 January 2013 | SimCorp A/S – Share Buyback Programme |
| 5/2013 | 4 February 2013 | SimCorp A/S – Share Buyback Programme |
| 6/2013 | 11 February 2013 | SimCorp A/S – Share Buyback Programme |
| 7/2013 | 14 February 2013 | Nordic Investment Manager commits to SimCorp Dimension |
| 8/2013 | 18 February 2013 | SimCorp A/S – Share Buyback Programme |
| 9/2013 | 25 February 2013 | SimCorp A/S – Share Buyback Programme |
| 10/2013 | 27 February 2013 | SimCorp A/S – Share Buyback Programme |
| 11/2013 | 27 February 2013 | SimCorp signs Nordic Investment Manager |
| February 6, 2013 | Deadline for submission by shareholders of SimCorp of resolutions to be considered by the Annual General Meeting 2013 |
|---|---|
| February 27, 2013 | Publication of Annual Report 2012 |
| March 21, 2013 | Annual General Meeting |
| March 27, 2013 | Expected date for payout of dividend |
| May 22, 2013 | Publication of interim financial report Q1 2013 |
| August 27, 2013 | Publication of interim financial report H1 2013 |
| November 28, 2013 | Publication of interim financial report first nine months of 2013 |
| Key ratios | |
|---|---|
| EBIT margin | Operating profit / Revenue x 100 |
| ROIC | Operating profit / Average operating assets x 100 |
| Debtor turnover ratio | Revenue / Receivables at year-end |
| 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 |
Earnings per share (EPS) Profit for the year / Average number of shares Diluted earnings per share Profit for the year / Average number of diluted shares (EPS-D) 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 Dividends paid / Number of shares at year-end of DKK 10 (DPS) Payout ratio Dividends / Profit for the year x 100
The key ratios have been calculated in accordance with IAS 33 and 'Recommendations and Ratios 2010' issued by the Danish Financial Analyst Association
Annual report for SimCorp A/S, Weidekampsgade 16, Copenhagen, Denmark, company reg. no. 15505281
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 SimCorp's website, where users can also subscribe to SimCorp's news service.
SimCorp's Investor Relations department handles all contact with investors and the press on issues relating to the company's shares. Investor Relations can be reached on:
Telephone +45 35 44 88 00 Fax +45 35 44 87 89 E-mail [email protected] Website www.simcorp.com
This annual report can be downloaded in a Danish and an English version from SimCorp's website. The original, Danish text shall be the governing text for all purposes, and in case of any discrepancy the Danish wording shall be applicable.
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 guarantees 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 27 and in note 29, 'Financial instruments and risks' 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 licence agreements will determine the impact on the order book and on licence revenue recognised for any specific financial reporting period. Accordingly, licence revenue is likely to vary considerably from one quarter to the next. Unless required by law or corresponding obligations, SimCorp A/S is under no duty and undertakes no obligation to update or revise any forward-looking statement after the distribution of this document, whether as a result of new information, future events or otherwise.
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