Annual Report • Apr 29, 2009
Annual Report
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| 1 | Letter from the CEO | 3 |
|---|---|---|
| 2 | Key figures | 4 |
| 3 | Profile | 5 |
| 4 | Composition of the Boards | 7 |
| 5 | Report of the Board of Directors | 9 |
| 6 | Report of the Supervisory Board | 14 |
| 7 | Corporate governance | 17 |
| 8 | Shareholders' information | 18 |
| 9 | Risk & Control | 21 |
| 10 Management statement | 25 | |
| 11 | Financial statements 2008 | 26 |
| 12 | Other information | 61 |
Ir. D.S. Tuynmanweg 10 4131 PN Vianen the Netherlands P.O. Box 151 4130 ED Vianen the Netherlands
Telephone +31 347 329 755 Fax +31 347 329 736 E-mail [email protected] Internet www.bluefox.nl
Trade register Utrecht Chamber of Commerce under number 23092326.
Dear shareholder,
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The year 2008 was marked by the completion of the turn-around programme that started in 2006 and was finalised in the first half of 2008 with the sale of the Porini activities. Upon the completion of the turn-around programme, Cees van Steijn passed the chairman's gavel to Arie van Leusden, heralding a new phase for Blue Fox in which it reviewed its strategic plan. The optimisation of shareholder value has always been the key factor in this decisionmaking process, however, the continuity of operations, crucial to the employees and clients of Blue Fox, has also played a major role in charting the new course.
At the end of 2008 it was decided to flesh out the stand-alone model. Together with large shareholders, financiers and newly appointed management, a thorough recapitalisation has been implemented making Blue Fox is now ready to move forward independently. Blue Fox currently comprises the CAD/CAM activities of NedGraphics, the ERP activities of Dynamics Perspective and the holding company, which is necessary for its listing on the stock exchange.
We, as new management, have always believed in the stand-alone scenario. The market position and the potential offered by NedGraphics' products and organisation constitute a solid basis for further growth. However, Blue Fox has just emerged from a difficult position and it will take ingenuity and perseverance to realise its potential. Therefore, we will be focussing on the business operations at NedGraphics, introducing new zest in our organisation and improving our commercial performance.
From this position, we would like to thank ourshareholders and financiersfortheir commitment. The decisions that had to be taken were not easy, and your unswerving efforts and trust have been of great value to us. We would also like to thank our clients, business partners and employees for their contribution and loyalty. It was, again, a challenging year in which we were faced with many problems.
2009 will be a year marked by the ongoing building of the NedGraphics organisation. Not only will efficiency levels need to be improved, we will also need to explore new markets and expand our product portfolio. We are convinced of our ability to realise a successful future for Blue Fox in this new constellation.
Vianen, 29 April 2009
Pieter Aarts Chairman of the Board of Directors
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| 2008 | 2007 adj | 2007 | |
|---|---|---|---|
| Results from continued operations | |||
| (in thousands of euros) | |||
| Net revenue | 9.809 | 11.939 | 16.054 |
| Operating result | -2.268 | -661 | -1.959 |
| Net result | -6.182 | 4.616 | 4.616 |
| Cash flow | 1.268 | 4.154 | 4.154 |
| Employees (in FTE's) | |||
| Average number of staff in continued operations, | |||
| including staff hired out | 120 | 120 | 192 |
| Balance sheet information (in thousands of euros) | |||
| Balance sheet total | 14.520 | 21.639 | 21.639 |
| Shareholders' equity | 4.048 | 10.297 | 10.297 |
| Guarantee capital | 4.898 | 10.297 | 10.297 |
| Ratios (in %) | |||
| Operating result / net revenue | -23,1 | -5,5 | -12,2 |
| Net result / net revenue | -63,0 | 38,7 | 28,6 |
| Solvency (based on guarantee capital) | 33,7 | 47,6 | 47,6 |
| Liquidity | 1,7 | 1,9 | 0,5 |
| Figures per share (amounts in euros) | |||
| Average number of shares outstanding | 4.433.702 | 3.972.911 | 3.972.911 |
| Result per share | -1,39 | 1,16 | 1,16 |
| Cash flow per share | 0,29 | 1,05 | 1,05 |
Blue Fox is a global provider of high-quality software solutions and services for manufacturers and designers of the products, designs and brands which surround us in our day-to-day lives. In the form of fashion items, accessories, carpets and other woven materials, our software is in evidence every day.
History Blue Fox was founded in early 1999 and has been listed on Eurolist of Euronext Amsterdam N.V. since 21 May 1999. Since then, it has followed a strategy of rapid growth through buy-and-build. In 2006 the company found itself in a position of financial distress, which is why a turn-around process wasinitiated. This processincluded establishing a new strategic direction for the company and, consequently, divesting all non-core activities. In addition, the holding company was downsized dramatically and other cost reduction measures were implemented. The turn-around process was finalised by the sale of the Porini activitiesin the first half of 2008.
Current situation In its current composition, Blue Fox comprises a holding company, which operates the listing, and two operating companies: NedGraphics and Dynamics Perspective. NedGraphicsfocuses on developing and marketing CAD/CAM software for the textile industry, whereas Dynamics Perspective focuses on selling ERP systems and related services for the Apparel industry.
NedGraphics NedGraphics provides integrated software solutions for the textile industry around the world. It has over 30 years of experience in developing, marketing and supporting the leading CAD/CAM software for thousands of companies. Our products are seen as A-brand in the market because of their continuousinnovativeness, optimal functionality and broad applicability.
The software provided by NedGraphics enables companies in the textile industry to improve sales, minimise their time to market, optimise their product development workflow, reduce sampling costs and achieve operational excellence. There are three main market segments:
In all segments, the NedGraphics software actively supports customers throughout the entire textile value chain. From freelance designers to large-scale production facilities and from yarn manufacturing to weaving and pattern cutting – the NedGraphics software offers a suitable solution to all types of customers.
NedGraphics has offices in the world's most important design and production centres for the textile industry and its products are sold through a global network of resellers and agents, as indicated on the map.
Cees van Steijn (1951) Chairman (Aug '06 - April '08) Cees van Steijn studied Business Economics in Amsterdam, and obtained his MBA at IMD in Lausanne. During the 1970s, he gained international experience at Fokker B.V. After earning his Master's degree in 1981, he worked for 12 years at the Amsterdam-based management consultancy firm Van de Bunt, where he was a Senior Consultant and partner. He worked as Managing Director of two publishing companies, first at Meulenhoff Educatief B.V. in Amsterdam from 1993, and from 1996 also at Leiden-based SMD Uitgevers. From 1999, Cees van Steijn served on the boards of Amsterdam RAI B.V., Newconomy N.V., Landis ICT Group N.V., NOB N.V., Veronica and Priority Telecom N.V. These positions entailed that Cees van Steijn was also a member of the supervisory boards of various companies (e.g., SBS Broadcasting, Veronica Holding, Explainer DC and Centraal Boekhuis).
Arie van Leusden (1943) Chairman (May '08 – December '08) Arie van Leusden graduated from Nyenrode Business Universiteit and obatined his BBA at Colorado College in the US. He worked at IBM for more than 26 years; most recently as board member of IBM Netherlands, responsible for Sales and Marketing. He then became Managing Director at Digital Equipment Netherlands and subsequently Managing Director at Triple P in Vianen. In 1997, he was appointed as Managing Director of Lucent Technologies in the Netherlands and shortly after, he was charged with the responsibility for the Scandinavian countries, the Benelux and Switzerland. In mid-2001, he was appointed as interim director of Pecoma in Amsterdam. His principal current positions include Chairman of the Supervisory Board of Getronics, Chairman of the Supervisory Board of TDM Holdings in Naarden, Chairman of the Supervisory Board of Comtech DDS in Culemborg and member of the Aufsichtsrat of arxes Network Communication Consulting in Cologne.
Pieter Aarts (1967) Chairman (January '09 - …) Pieter Aarts graduated from the Eindhoven University of Technology in 1989 and became Master in Business Administration after graduating from Kingston University in London (UK). He started his professional career in 1989 as a consultant in logistics at one of PinkRoccade Group's subsidiaries. In 1994, Pieter was appointed as Managing Director of PinkRoccade Industry. Until 2004, he held various management and executive positions within PinkRoccade. He was a member of the Board of PinkRoccade from 2002 until 2004. Pieter was appointed as a member of the Board of Directors at HP Netherlands (2004-2005) before taking on several interim management positions (Inter Access, Ordina). Since 2002, Pieter has held various advisory management positions at a number of organisations, mainly in the ICT industry.
Jan-Hein Pullens (1972) Chief Operating Officer (January '09 - …) Jan-Hein Pullens graduated from the Utrecht University of Applied Sciences, Faculty of Economics and Management in 1997. He started his professional career in 1996 as an Account Manager in the software industry. After 3 years, he wasrecruited by Unisys Netherlands, where he held various management and sales executive positions within Unisys' Global Industry and Global Infrastructure divisions. In 2004, Jan-Hein was appointed as Division Director Outsourcing at Inter Access, where he led the development and growth of this new division. In 2007, he joined Hewlett-Packard's EMEA Strategic Outsourcing team as an Engagement Lead focussing on the large international IT outsourcing deals. Since 2005, Jan-Hein has held various advisory management positions with a number of organisations.
Servaas L.M. Houtakkers (1959), Chairman Supervisory Board (August '05 - …) Mr Houtakkers graduated from Nijmegen University and started his professional career as a corporate lawyer at Hendrix International, now known asthe Euronext Amsterdamlisted company Nutreco NV, before moving to MeesPierson NV's legal department in Amsterdam. In the early 1990s, he pioneered the banking and trust activities of MeesPierson in Belgium. In 1994, he was appointed Managing Director of MeesPierson Trust Luxembourg and subsequently appointed Managing Director of MeesPierson (Luxembourg) Banquiers. He moved to Brussels in 1997, where he acted as Chief Operating Officer of EASDAQ NV/SA and subsequently, from late 1998, continued his career at Merrill Lynch NV in Amsterdam. In 2001, he was appointed managing partner at a Brussels-based corporate services company. Mr Houtakkers has been active as a corporate consultant since January 2005. He is a member of the advisory board of Greening International Partners and was a member of the Managing Board of Burani Designer Holding BV until February 2007. He was Chairman of the Board of Directors of Prolion Holding NV from 2002 until September 2004 and of Interbanca International Holding SA from 2003 until March 2005.
Leon P.E.M. van den Boom (1952) Member Supervisory Board; Chairman Audit Committee (August '05 - …) Mr Van den Boom studied at the University of Groningen and the Vrije Universiteit in Amsterdam and is a business economist and registered accountant. He worked for the University of Washington and for ABN Bank, was a partner at Van de Bunt, Managing
Partner at the Van den Boom Groep, and a member of the Executive Board of NIB Capital Bank N.V. Currently he is a senior partner at PARK Corporate Finance in Laren. Mr Van den Boom specialisesin issuesin the field of Corporate Finance and Corporate Governance. He holdssupervisory directorships at RFS Holding BV ("Wehkamp"), FD Media Groep BV, Inter Access Groep BV, Nyloplast NV, Broekhuis Training Groep BV and IE Holding BV. He is Chairman of the Stichting Financieringspreferente Aandelen VOPAK NV and a member of the Board of Stichting Administratiekantoor Fugro N.V.
Dirk Lindenbergh (1949), Member Supervisory Board (January '09 - …) Mr Lindenbergh has been an entrepreneur for most of his career, having founded an internationally-operating business in the gaming industry. He sold his company in 2000 to ABN Amro equity and NPM Capital and was a board member within the newly formed company for another six years. Mr Lindenbergh followed part-time courses in Philosophy at Groningen University, Business Valuation at Erasmus University Rotterdam and graduated in Business Administration from Nyenrode Business Universiteit during his career as an entrepreneur. In 2004, he followed the Advanced Management Programme at Nyenrode Business Universiteit and in 2005, he followed a special course for non-executive board members at the same University. Since 2006, he has been a member of the board of Docdata N.V. In 2007, he joined the board of Midlin N.V. and in 2008, he became a board member at Astor Participaties (Private equity). Mr Lindenbergh is also a board member of Schild Holland Fonds (a real-estate company) and is active in two charity organisations.
Operational The 2007 financial year was marked entirely by the turn-around process that thoroughly restructured Blue Fox Enterprises and involved an intensive divestment programme in our business operations. The year 2008, in turn, was marked by the finalisation of that turn-around process and the relaunch of the remaining operational activities. With three business units left - NedGraphics in the Netherlands and the United States, Dynamics Perspective in the United States and Porini in Italy - the size of the company had been reduced to a scale that required a further development of our plans for the future. The two-track policy announced in 2007 was followed in this respect.
However, it soon became clear that finding a strategic partner for the whole of Blue Fox Enterprises could no longer be considered a realistic option. Since the remaining business units did not offer any synergies, a definitive solution had to be found for the separate units; at the same time, the company's listing on the stock exchange was also re-assessed.
Gruppo 300sessanta, an Italian investment firm, offered a solution for Porini. This firm was able to provide Porini with the space it needed to grow independently and put a stop to the cash out for Blue Fox. The sale process was completed in April 2008.
At that time, the size of the company no longer justified the size of the holding company. Mr Cees van Steijn resigned as managing director at the Extraordinary General Meeting of Shareholders of 29 April 2008 and the staffing level at the holding company was reduced to two employees, the group controller and the CEO of the company.
At the Extraordinary Meeting of Shareholders of 29 April, Mr Arie van Leusden was nominated and appointed assucceeding chairman of the board ad interim. This appointment gave the holding company the executive flexibility it needed to further shape the future of NedGraphics and to continue the roll-out of the two-pronged policy referred to above. However, meetings held with various parties during the summer and in the autumn did not result in the strategic partnership the company was looking for.
In the beginning of October, it was therefore decided to flesh out a final version of the stand-alone scenario, also described as the 'entrepreneur model' at the Annual General Meeting of Shareholders of 25 May 2007. Market conditions were also starting to leave a deep mark on the operating results at that time. The stand-alone scenario was gradually evolving into a rescue plan, in which the external financier and the majority of the principal shareholders have played an important role.
On 19 November 2008, an agreement was reached through which Blue Fox Enterprises could continue its business operations thanks to the appointment of new management and the issue of a mandatory convertible bond loan. At the Extraordinary General Meeting of Shareholders of 12 December 2008, Arie van Leusden resigned as chairman of the board as per 1 January 2009 and Pieter Aarts and Jan-Hein Pullens were appointed as directors of the company as per that same date. This board was set with the task of taking responsibility for the operational activities of the organisation – read: NedGraphics - and to flesh out a business plan for the future.
Since 1 January 2009, the focus has been directed at an independent future for Blue Fox. A future that will revolve around NedGraphics. NedGraphics takes a leading position in the Textile and Apparel market. The organisation has been able to carve out this position thanksto its expertise in thisspecific market and the strategic development will be furthershaped on the basis of 'product leadership'.
The business plan drawn up by the new Board of Directors is built around the Value Triangle. In addition to actions geared towards performance improvement and revenue growth, it also describes plans for structural market development. In the first 100 days after its appointment, the new Board of Directors have continued to fine-tune its business plan and realise a number of pre-determined 'Quick Wins'. NedGraphics' key asset is CAD/CAM software development and deployment in the Textile & Apparel market. Leveraging this key asset in combination with today's market and technology innovations enables NedGraphics to become the global leader in its market niche.
Financial results Blue Fox ended 2008 with a net loss of € 6.2 million (2007: € 4.6 million profit). The net loss was mainly the result of the sale of the Porini activities, which generated a book loss of € 3.4 million. In addition, a € 1.2 million impairment on goodwill was recognised in 2008. The operating result for 2008, excluding the impairment loss, amounted to € 1.1 million negative (2007: € 0.7 million negative).
All activities relating to Porini's ERP business were sold in the first half of 2008. These activities contributed € 1.2 million to revenue and € -0.3 million to the operating result (2007: € 4.1 million and € -1.3 million). The sale of the Porini activities resulted in a book loss of € 3.4 million. The results are classified as 'Discontinued Operations' in the financial statements.
In addition, the activities in the Engineering and GIS software segment were divested in 2007. The results of these activities were also recognised under discontinued operations in 2007.
The continued activities include the CAD/CAM activities of NedGraphics, the ERP activities of Dynamics Perspective and the holding. The net revenue of NedGraphics decreased considerably by 17.2%, to € 8.7 million (2007: € 10.6 million), mainly as a result of the recent economic developments. The lower revenue had an immediate impact on the operating result, which decreased from € 1.9 million in 2007 to € 0.4 million in 2008. The revenue from the ERP activities of Dynamics Perspective decreased from € 1.4 million in 2007 to € 1.1 million in 2008. The effects of the current economic conditions impacted the ERP business later than the CAD/CAM business due to the longer planning periods in the ERP business. The operating result of Dynamics Perspective improved from a loss of € 1.0 million in 2007 to a loss of € 0.1 million in 2008.
After the sale of the Porini activities, the holding company was reduced to a small but effective team. Costs were further reduced to € 1.2 million (2007: € 1.8 million). In addition, the holding company recognised an impairment loss of € 1.2 million. The operating loss for 2008 for the continued operations, including the impairment, was € 2.3 million (2007: € 0.7 million).
Cash flow, investments, financing Despite the operating loss, the operational cash flow in 2008 amounted to € 1.4 million positive (2007: € 0.5 million positive). The improvement is due to the reduced cash outflow to the Porini activities. The cash flow from investments was, on balance, € 1.6 million negative (2007: € 3.9 million positive) as a result of the limited proceeds from the sale of the Porini activities and continued investments in new software development.
In the course of 2008, an additional long-term loan of € 0.6 million was attracted from the company's current financier. As part of the recapitalisation of Blue Fox at the end of 2008, repayment of both the new and the existing loan has been postponed until the end of 2010. In addition, the main shareholders have contributed an € 850,000 mandatory convertible loan. This resulted in a positive cash flow from financing activities of € 1.5 million (2007: € 0.2 million negative).
The total change in cash and cash equivalents in 2008 amounted to € 1.3 million positive (2007: € 4.2 million positive).
Balance sheet Fixed assets fell from € 13.0 million in 2007 to € 8.3 million in 2008. This is due to the € 1.2 million impairment on NedGraphics' goodwill, the € 3.3 million sale of the in-house developed software that formed part of the divested Porini activities and the € 0.2 million result from regular business activities.
Due to the negative results in the past few years, Blue Fox has losses that may be carried forward. These tax assets are not shown on the face of the balance sheet, as it is currently not certain that sufficient taxable profits will be made in the near future to realise the value of these tax assets.
Shareholders' equity decreased from € 10.3 million as per 31 December 2007 to € 4.0 million as per 31 December 2008. This € 6.3 million decrease includes the net loss in 2008 of € 6.2 million, and exchange rate differences in participating interests. As a result, solvency fell to 27.9% at year-end 2008, from 47.6% at year-end 2007. Based on guarantee capital (equity including the mandatory convertible loan) solvency amounted to 33.7% at the end of 2008.
No shares were issued in 2008. Hence, the number of outstanding ordinary shares, with a nominal value of € 2.00 each, remains 4,433,702 at the end of 2008. The mandatory convertible loan issued at the end of 2008 was only converted in 2009.
Outlook In 2008, the holding company's expenses were reduced to a minimum. Nevertheless, they still weigh heavily on the relatively small consolidation base. In 2009, the holding company costs are expected to rise due to a different allocation of management expenses among NedGraphics and the holding company.
Currently our research and development activities in respect of the CAD/CAM software are located in Vianen (the Netherlands) and in Bucharest (Romania). No significant changes on this matter are expected for the coming year.
The forecasted investments in fixed assets in 2009 will not significantly differ from the 2008 investments.
As there are very few synergies between NedGraphics' CAD/CAM business and Dynamics Perspective's ERP business, Blue Fox is currently investigating how Dynamics Perspective fits in its strategy. This relatively small operational segment (see note 3) made an operating loss of € 0.1 million in 2008 and is expected to break even in 2009. Dynamics Perspective is a provider of ERP software and related services for the Apparel industry, has a solid customer base and is currently expanding its product portfolio with another ERP system.
In 2009, the cash balances are expected to be positive throughout the year and therefore it is expected that no additional funding will be required. This expectation is based on management's forecast and plans for 2009. These plans are based on a turnaround scenario and include, but are not limited to, cost savings contingency plans in case revenue does not develop as expected. The trough of the cash position for 2009 does not provide for much headroom for unanticipated developments, but the cash position is expected to improve in the fourth quarter of 2009. At the end of 2010 the non current loan will mature. The ability to refinance this loan and to continue as a going concern in the year 2010 and thereafter will depend on the profitability and positive cash flows of the Company. Management is confident that they will restore profitability.
Staff and organisation The human resources policy at Blue Fox focuses on skills and talent development. We have a decentralised approach to the operating companies based on worldwide HR standards.
The operating companies of Blue Fox hold top positions within their respective market segments. Entrepreneurship is stimulated universally throughout the Blue Fox organisation, as most operating companies are organised into smaller units which operate with a certain level of autonomy. The directors of the operating companies are responsible for the commercial and financial developments with regard to their company and they report to the Board of Directors. This management approach creates a mentality of speed, flexibility and leadership with short communication lines, making the best possible use of the knowledge and know-how of Blue Fox' people and the quality and reputation of its products and services.
Each operating company pays attention to the training and development of its staff members. Both internal and external training courses are given to groups of staff members. In addition, individual staff members are encouraged to follow external training courses that benefit the position they hold.
The HR policy focuses on a competitive remuneration policy, a sound career development and the introduction of a mobility policy, as well as the implementation of a worldwide performance management system. Management development and succession planning are also a focus of attention.
The average number of staff members decreased from 215 to 138 FTEs. The average for 2008 includes staff of the Porini entities for a three-month period only; the average for 2007 includes staff of those entities, as well as staff from other disposed subsidiaries (CadGis, Pollux), for the related periods in 2007. At the entities that are still part of Blue Fox, the average number of staff did not change – 120 FTEs on average.
At year-end 2008, Blue Fox had 120 staff members, compared to 192 at year-end 2007. Two FTEs worked at the holding company, 107 FTEs worked at NedGraphics and 11 worked at Dynamics Perspective. There were 71 FTEs working at the Porini entities when they were sold. No forced lay-offs resulted from the sale.
Blue Fox' workforce is very international, with personnel from approximately 23 different countries. Approximately 70% of the company'stotal employee base worksin Europe, with 25% of these employees working in the Netherlands. The remaining employees, who work outside of Europe, are mainly based in the USA and China. No major changes in the composition of the workforce of the continued operations are expected for 2009.
| Average number of FTE's | |||
|---|---|---|---|
| amounts in thousands of euros | 2008 | 2007 adj | 2007 |
| Continued operations | |||
| Staff members (in average FTE) | 120 | 120 | 192 |
| Average contribution per FTE | |||
| to gross margin | 78 | 93 | 78 |
| Average wage costs per FTE | 44 | 52 | 54 |
| Continued and discontinued operations | |||
| Staff members (in average FTE) | 138 | 215 | 215 |
| Average contribution per FTE | |||
| to gross margin | 76 | 81 | 81 |
| Average wage costs per FTE | 45 | 53 | 53 |
We hereby present the financial statements for the financial year 2008, as prepared by the Board of Directors and adopted by the Supervisory Board, as well as other information concerning Blue Fox Enterprises N.V.
The financial statements for 2008 have been audited by KPMG Accountants N.V. An unqualified audit opinion has been issued, which can be found on page 61. The financial statements and the auditor's report were discussed at the meetings of the Supervisory Board and the Board of Directors in the presence of the auditor on 16 March 2009, and on 28 April 2009.
We recommend that the shareholders approve the 2008 financial statements at the forthcoming Annual General Meeting of Shareholders, which will be held on 26 May 2009, in accordance with the documents presented. Moreover, we recommend that the Board of Directors be discharged from liability with respect to its management and the Supervisory Board with respect to its supervision.
Composition of the Supervisory Board As from the Annual General Meeting of Shareholders held in May 2007, the Board has been composed of its statutory minimum of two members. During the Extraordinary Meeting of Shareholders held on 12 December 2008, at which meeting the stand-alone future and a new management structure were presented, the shareholders approved the appointment of Mr Dirk Lindenbergh as a member of the Supervisory Board. He has been appointed for a 3-year term starting 1 January 2009. Mr Lindenbergh has been a shareholder of the company since the autumn of 2007. He holds over 10% of the shares in Blue Fox Enterprises N.V. and, as such, cannot be considered independent in terms of the Tabaksblat Code. The members of the Supervisory Board fit the profile that has been drawn up in consultation with the Board of Directors. This profile takes account of the nature and the current activities of Blue Fox Enterprises N.V. and the desired expertise and background of the members of the Supervisory Board.
A member of the Supervisory Board will not be eligible for (re)appointment if that member has already served three consecutive periods of 3 years as a board member at Blue Fox Enterprises N.V.
Report on 2008 The Supervisory Board and the Board of Directors met 10 times in 2008. In addition, there have been formal telephone conferences and various informal contacts, both between the Supervisory Board and the Board of Directors and between
the members of the Supervisory Board. The Board convened an Extraordinary General Meeting of Shareholders in April and December, as well as the Annual General Shareholders' Meeting in May 2008.
For the Supervisory Board, 2008 was a year marked by intensive consultations with the Board of Directors, with alternating members. After the divestments effected in 2007, which included the sale of C2C, Pollux and CadGis, 2008 revolved entirely around Blue Fox Porini Srl. (Porini) in Italy and Blue Fox NedGraphics B.V. in Europe and the United States (NedGraphics), the remaining business units that required all our attention this year. Dynamics Perspective Inc., located in Los Angeles, constitutes only a limited part of our business operations.
Until April of the year under review, the combined meetings of the Board of Directors and the Supervisory Board were attended by Cees van Steijn, who was then CEO of Blue Fox. The recurring theme on the agenda was Porini, which an Italian party was willing to buy. By now, Porini and NedGraphics had proved unable to offer Blue Fox Enterprises the operational level of support required for sound future prospects.
The future of the company was mapped out on the basis of the two-track policy presented earlier. This included, on the one hand, assessing potential strategic partners for the company as a whole or for separate business units and, on the other, reviewing and fleshing out a stand-alone scenario. It was up to the Supervisory Board to include the interests of all stakeholders in its decisions during these various processes. These stakeholders include employees, shareholders, financiers, as well as third parties.
In April, the composition of the Board of Directors was changed, with Arie van Leusden being appointed as the only member of the company's Board of Directors and without deviating from the two-pronged policy. Servaas Houtakkers, appointed in 2006 as delegate supervisory director, continued to perform this position until 1 January 2009.
The negotiations with the Italian buyer, Gruppo 300sessanta S.A. from Como, ultimately resulted in the sale of Porini. The sale was finalised in June 2008. It had proven impossible to find a suitable partner or buyer for Blue Fox Enterprises N.V. as a whole. Despite different expectations, the remaining NedGraphics was not capable of continuing operationsindependently without receiving additional funding. This first became evident in the late summer of 2008 and the situation became critical in the beginning of October. In October, the Supervisory Board, in consultation with the Board of Directors, drew up a plan comprising three elements: to issue a mandatory convertible bond loan, refinance the loans then outstanding, and attract a new Board of Directors. The implementation of this plan was to provide a permanent solution for the company's future. The nomination and appointment of Arie van Leusden as interim CEO of the company served as a flexible management solution that allowed the Supervisory Board to come up with a permanent solution within a brief space of time.
In the context of this solution, the Supervisory Board also reviewed its own composition and competencies. Since the Supervisory Board comprised only the statutory minimum of two members, an addition to its numbers was now preferable. The new phase the company entered, earlier described as the entrepreneurial model, requires a different composition of the Supervisory Board. During the EGM of 12 December 2008, Mr. Dirk Lindenbergh was appointed as supervisory director of the company as per 1 January 2009. As per that date, Arie van Leusden resigned as managing director and Jan-Hein Pullens and Pieter Aarts were appointed as members of the Board of Directors. Servaas Houtakkers resigned as delegate supervisory director as per that date.
The Supervisory Board has discussed the plenary financial reports with the Board of Directors in detail. Apart from sales and margin developments, operating expenses, divestment results, balance sheet ratios, budgets and future prospects, the restructuring of the sales organisation was part of the agenda.
The Supervisory Board met five times in the absence of the Board of Directors. KPMG Accountants N.V. briefed the Supervisory Board on the findings of the 2008 audit at the Supervisory Board meetings of 16 March 2009, and 28 April 2009.
Committees of the Supervisory Board Under the Tabaksblat Code, it is common for the Supervisory Board to appoint a number of permanent committees. Due to the size of the company and the limited number of supervisory directors, it has been decided not to delegate tasks but to carry out the tasks related to the Audit Committee, Remuneration Committee and the Selection & Nomination Committee in joint collaboration.
Remuneration The Supervisory Board determines the remuneration of the members of the Board of Directors. The company's policy is aimed at attracting and retaining qualified managers under market conditions facing international listed companies that operate in the field of software development.
Selection and nomination In April 2008, Cees van Steijn resigned as CEO of the company and was succeeded by Arie van Leusden as interim managing director. During the Extraordinary Shareholders' Meeting of 12 December 2008, Arie van Leusden resigned as managing director as per 1 January 2009. Pieter Aarts and Jan-Hein Pullens have been appointed as members of the Board of Directors as from that date for a period of 4 years.
Audit Committee During 2008, the Audit Committee consisted of the two members of the Supervisory Board. The Audit Committee controls and assesses the financial reporting processes of the company, as well as the audit carried out by the external auditor. Two meetings were held with the external auditor. In these meetings, KPMG and the group controller were consulted on the production of the financial report. Apart from January and July, the internal financial reports were presented and discussed on a monthly basis with the Board of Directors.
Independence of the Supervisory Board The Chairman of the Supervisory Board has been acting as delegate supervisory director from May 2006 until December 2008. During that period he did not comply with provision III.2.2 of the Tabaksblat Code. Mr Van den Boom isindependent within the meaning of that provision.
External Auditor KPMG, represented by its partners Willem Riegman and Frank van het Kaar, acted as auditor of the company. Its nomination was approved by the Annual Shareholders' Meeting of 23 May 2008.
In Conclusion The Supervisory Board wishes to thank the members of the Board of Directors for their efforts to transform the company into what it is today. It also expressly wishes to thank all the employees of Blue Fox Enterprises N.V.; in spite of difficult times, they have always continued to give their best efforts. We wish them every success in further establishing our company's market position.
Servaas L.M. Houtakkers (Chairman) Leon P.E.M. van den Boom Dirk Lindenbergh
Vianen, 29 April 2009
General In recent years, we have discussed in detail the Dutch Code on Corporate Governance, issued on 9 December 2003 (also commonly referred to as the Tabaksblat Code) in the Annual Report. The Board of Directors and the Supervisory Board of Blue Fox endorse the Code. Within the framework of this Code, a company's stakeholders include staff members, shareholders and other providers of capital, financiers, suppliers, customers, as well as government authorities, social groups and factions. The Board of Directors and the Supervisory Board of Blue Fox are responsible for striking a balance between the interests of these stakeholders, while taking into account the continuity of the company.
In accordance with the recommendation of the Tabaksblat Committee to 'comply or explain', Blue Fox corporate governance practice was placed on the agenda of the Annual General Meeting of Shareholders in May 2006, in order to give shareholders the opportunity to voice their opinion on the way the company interprets compliance with the Code. A description of Blue Fox's corporate governance policy, including the relevant regulations and reports, can be found on the website. The policy is reviewed periodically and amended if necessary. Changes are discussed in the General Meetings of Shareholders.
The Board of Management isresponsible for the proper functioning of the risk management and internal controlsystems. The objective of these systems is to control, as far as possible, the major risks to which the company can be exposed, to make possible the reliable achievement of operational and financial goals and to ensure compliance with applicable legislation and regulations. The company pays structural attention to the optimisation of the design and operation of the risk management and internal control systems. We refer to chapter 9 Risk & Control. The Board of Management is aware thatsuch systems, however professional they may be, can neither provide absolute assurance that the company's objectives will be achieved, nor can they entirely prevent material errors, loss, fraud and contraventions of laws and regulations.
Taking the above into account, to the best knowledge of and in the opinion of the Board of Management, the risk management and internal control systems:
Reference is made to chapter 6 Report of the Supervisory Board for an explanation of how the Supervisory Board determines management's remuneration. We refer to note 44 of the Financial statements 2008 for an overview of the remuneration of the Supervisory Board and Board of Directors in 2008.
Deviations from the Code Blue Fox complies with most of the main recommendations and provisions of the Code. The main deviations from best practice provisions are listed below.
General The shares of Blue Fox Enterprises N.V. have been listed on Euronext Amsterdam by NYSE Euronext since 21 May 1999. As at 31 December 2008, the number of outstanding Blue Fox Enterprises N.V.shares was 4,433,702 (2007: 4,433,702). In an Extraordinary General Meeting of Shareholders that was held on 12 December 2008, it has been decided to lower the nominal value of the Blue Fox Shares from € 2.00 to € 0.10. The reasons for this decision are the accumulating losses of the past years and the fact that the share price on the stock exchange has been below par value for over three months in a row. This decision was subject to an objection period of two months, after which the decision was effectuated.
In addition, it was decided to issue a convertible loan of € 850,000 with mandatory conversion as soon as the nominal value of the shares had been decreased. This means that 2,897,652 shares had to be issued in 2009 as a result of the loan and for compensation of interest on the loan.
As far as Blue Fox can ascertain, most of the shares are held by Dutch institutional and private investors.
Pursuant to the 'Wet Melding Zeggenschap' (WMZ, the Act on Disclosure of Major Holdings in Listed Companies), an interest of 5% or more in the capital of Dutch listed companies must be reported. In addition, the passing of certain boundaries of percentage ranges in shareholdings must be reported. The following table is a review of the interests as at 31 December 2008, based on the latest information received.
| Shareholders | interest in % | interest in % |
|---|---|---|
| before conversion | after conversion* | |
| Todlin N.V. | 12,7 | 18,2 |
| D. Lindenbergh (through Blikkenburg B.V.) | 10,2 | 14,3 |
| F.L.H. van Delft (through Bibiana Beheer B.V.) | 9,0 | 11,2 |
| Vereniging Frieslandbank | 8,0 | 4,8 |
| Driessen Beleggingen B.V. | 5,9 | 5,9 |
| Generali Holding Vianna AG | 5,7 | 5,8 |
| J.H. de Groen (through De Kolk Beheer B.V.) | 5,2 | 7,7 |
| Beleggingsmij West-End B.V. | 5,1 | 5,2 |
* Conversion took place in 2009
key figures per share (based on average number of outstanding shares)
| 2008 | 2007 | |
|---|---|---|
| Net result | -1,39 | 1,16 |
| Shareholders' equity | 0,91 | 2,59 |
| Highest share price | 2,75 | 3,50 |
| Lowest share price | 0,40 | 2,00 |
| Closing price as at December 31st | 0,53 | 2,45 |
| P/E ratio as at december 31st | ||
| 2.349.862 | 10.862.570 |
|---|---|
| 3.513 | 5.738 |
| 12.122 | 15.308 |
Staff options The table below presents an overview of option rights granted and outstanding options at year-end 2008. The options were issued to staff members with permanent contracts, up to a maximum of 2% of the number of shares outstanding. For the periods 2005 - 2008, the Board of Directors and Supervisory Board decided not to grant any options to employees. As of 2003, members of the Supervisory Board of Blue Fox no longer received stock options. In 2006, 2007 and 2008, no options were granted to the Board of Directors. In chapter 11, the notesto the 2008 company financial statements state the numbers of outstanding stock options of the members of the Board of Directors and the Supervisory Board.
| issued | outstanding | exercised | exercise | |||
|---|---|---|---|---|---|---|
| 31-12-2007 | date granted | term | options | options | / cancelled | price (€) |
| May 2003 | 2008 | 33.980 | 11.840 | 22.140 | 5,80 | |
| May 2004 | 2009 | 27.400 | 9.780 | 17.620 | 6,34 | |
| Total | 61.380 | 21.620 | 39.760 | |||
| issued | outstanding | exercised | exercise | |||
| 31-12-2008 | date granted | term | options | options | / cancelled | price (€) |
| May 2004 | 2009 | 27.400 | 4.850 | 22.550 | 6,34 | |
| Total | 27.400 | 4.850 | 22.550 |
The Amsterdams Effecten Kantoor (AEK) acts as liquidity provider for Blue Fox shares.
Amsterdams Effecten Kantoor (AEK), Herengracht 208-214 1016 BS Amsterdam Telephone + 31 (0)20 530 63 00
Dividend policy In view of Blue Fox's situation, the company has paid no dividends in the past year. A healthy balance between the company's capital and borrowings, in relation to the assets that can be financed within the company, is of great importance in this respect. Given the current solvency and financing structure, it is prudent for the company not to pay out a dividend.
Prevention of insider trading Blue Fox has drawn up Insider Trading Regulations in accordance with the model of the VEUO (Vereniging van Effecten Uitgevende Organisaties - the association of share issuing organisations), which has been approved by the Netherlands Authority for the Financial Markets (AFM).
Blue Fox has made a large group of staff members and advisors sign the Insider Trading Regulations. The Insider Trading Regulations of Blue Fox include a ban on trading in Blue Fox shares during an eight-week period prior to the first publication of full-year results and a three-week period prior to the publication of half-year results. There is also a ban on reversing a transaction within six months, in order to reduce or eliminate the risk. An exemption in writing from this ban can be given by the Compliance Officer. No exemptions were given during 2008.
Investor Relations Blue Fox greatly values a good relationship with its shareholders. In the interest of fair disclosure, all new material information is disclosed through the timely and simultaneous distribution of press releases on relevant issues concerning Blue Fox. In addition to the financial results, the company also provides much information on its strategic choices and objectives. Blue Fox observes a 'silent' period during which it holds no road shows or interviews with potential or current investors. For the annual figures, this period covers the eight-week period prior to the first publication of full-year results and a three-week period prior to the publication of half-year results. Relevant information for potential and current shareholders may be found on the Blue Fox website under the link 'Investor Relations'. Direct questions from investors may be directed by e-mail to [email protected].
Tuesday 26 May 2009 Annual General Meeting of Shareholders 2009 Tuesday 1 September 2009 */** Presentation first-half results 2009 Wednesday 17 March 2010 */** Presentation full-year results 2009 Tuesday 25 May 2010 ** Annual General Meeting of Shareholders 2010 Wednesday 1 September 2010 */** Presentation first-half results 2010
* before trading hours
** provisional
General Blue Fox operates in a highly dynamic and international environment, which makes specific demands regarding the management and controlling of risks. This chapter containssome of the main risks which could eventually affect the results of Blue Fox. The policy of Blue Fox remains aimed at the continuous guarding and improvement of the internal risk management processes, in order to further optimise the quality and effectiveness of these processes and their safeguarding, and adapt these where necessary.
The Board of Directorsisresponsible for the internal control and the management of risks within the company and for the assessment of the effectiveness of these control systems. Such control systems were set up to identify and subsequently manage risks, which could endanger the realisation of the objectives of the company. It should be noted that no single (control) system offers an absolute guarantee against material inaccuracies or losses.
Blue Fox aims to ensure that its risk management activities are in line with the best practices laid down in the Code Tabaksblat (the Dutch Corporate Governance Code). The risk management model developed by Blue Fox is intended to present a practical framework to support the objectives and the assessment of risks and anticipated rewards as identified by the company. The model distinguishes three areas which are subject to particular attention for analysis purposes, being:
The main aspects of the formulated risk management model are:
System of internal controls The internal control system contains all elements of internal control and contributes to discipline and structure. The following control measures form part of the internal control system of Blue Fox and serve to secure reliable financial and reporting processes, while also securing an adequate risk management.
Planning & control cycle The planning & control cycle starts with drawing up a budget for each operating company. The main control variable for Blue Fox is the net result before taxation, the Earnings Before Tax (EBT). The Managing Directors of the operating companies have a certain level of autonomy with regard to achieving the budgeted EBT within the agreed framework.
Other important control variables are net sales, gross margin and operating result. In addition, Blue Fox controls and manages its operating companies on the basis of a number of company-specific key figures, which may vary per operating company.
The operating companies report monthly in accordance with a fixed reporting format. Meetings of the Board of Directors with the Managing Directors of the operating companies are held on a monthly basis or more often if the situation requires it. These monthly meetings are used in particular to discuss the operating developments and the required subsequent adjustments to the budgets, in addition to the financial developments.
Blue Fox Accounting & Reporting Manual The Blue Fox Accounting & Reporting Manual contains guidelines regarding the accounting principles that have to be adhered to, as well as instructions regarding the filling out of the reporting forms to be used within the Blue Fox organisation.
Audit Committee The Audit Committee consists of two Members of the Supervisory Board and guarantees an independentsupervision of the process of risk management from the supervisory responsibility of the Supervisory Board. The Audit Committee concentrates on the quality of the internal and external reporting, on the effectiveness of the internal control measures and on the functioning of the external and internal auditors. Audit Committee meetings were combined with regular Supervisory Board Meetings.
Internal financial and operational audits In connection with the monitoring and safeguarding mechanisms, internal audits are planned and conducted each year, aimed at securing the quality of the main operating processes and reviewing related business risks. These internal audits cover the financial reporting (financial audits) and the existence and functioning of operating policies and procedures (operational audits). Due to changes in the organisation, the internal audits conducted in 2008 were limited.
Protection of intellectual property rights Blue Fox tries to protect its intellectual property rights as far as the company believes this to be economically viable. Protection of intellectual property is effected through the registration of trademarks, by using confidentiality agreements and non-competition clauses in agreements and by using hardware key-locks and/or embedded software codes in Blue Fox software to protect it against illegal use.
Directors' regulations All Statutory Directors of the operating companies have signed a copy of the Directors' regulations. These regulations with regard to the limits of their authority identify in which cases the board of the operating company require prior approval from the Board of Directors for certain decisions, depending - among other things - on the nature or the size of certain businesses.
Code of conduct and whistleblower procedure In compliance with the Dutch Code on Corporate Governance, a code of conduct and a whistleblower procedure were implemented in 2005. The procedure serves to ensure that any alleged infringement of the existing policies and procedures may be reported without the person making the report suffering any negative consequences of his action.
Market risks Competitive position The company aims for a top three position in the CAD/CAM for Textile and Apparel industry. In view of this ambition, the ability of Blue Fox to distinguish itself from its competitors in the market is of great importance. That is why Blue Fox focuses on professional markets and on providing its customers with integrated software solutions and continuously invests in new product development. Reliability, improving productivity, sustainability, user friendliness and a low cost of ownership are important elements in this strategy.
As a global player, Blue Fox is forced to comply with the global needs and requirements of its customers, which could result in investments and start-up costs to open new locations worldwide.
Exposure to economic developments Blue Fox operates as an ICT company in the Textile industry. The Textile industry often shows sharper up- and down swings in economic conditions as does the market on average. With the present economic conditions at hand, the Textile industry is expected to show a more than average decline and this will impact the performance of Blue Fox in some way or another.
A large part of Blue Fox sales relate to income from the sale of software licenses, as well as the provision of related services such as maintenance, support and training related to the company's proprietary software solutions. Sales of software licenses and related consultancy services are mostly non-recurring and hence sensitive to fluctuations in economic conditions. On the other hand, the income from maintenance and support contracts is largely recurring business, which can mitigate the impact that the current economic condition has on overall business performance.
Software development Software development is a critical success factor for Blue Fox. The innovation-focused policy comes with specific risks which are inherent in investing in the development of new technologies and new functionalities. These new developments must not only meet operating requirements, but will also have to find a place in the market to result in value creation. Software development demands specific and continuous attention if it is to result in successful new product launches.
Seasonal influences Blue Fox' sales undergo seasonal influences and are not spread evenly throughout the year. Blue Fox historically realises an important part of its sales and profit in the fourth quarter. If sales in the fourth quarter do not rise to a level that is significantly higher than the preceeding quarters, this will have a relatively strong negative impact on the full-year results of Blue Fox.
Spread of sales Blue Fox has an extensive worldwide client base. As a result of the spread of sales and the related results, the Company's overall results depend only to a small extent on the realisation of (some) major orders. Blue Fox usually records only a limited number of relatively large orders per year. These orders have a direct impact on the realised sales and the result. The geographical spread of the sales of Blue Fox contributes to the stability of the total income flow.
Operational risks Illegal copying of software Safeguarding the authorised use of software solutions is of great importance to Blue Fox. In practice there is always some danger that the software developed or distributed by Blue Fox is copied illegally. With the help of an authorisation code and a hardware key-lock, Blue Fox has limited the risk as much as possible. In addition Blue Fox is a member of the BSA – the Business Software Alliance – an organization that makes an effort detecting and preventing use of illegally copied software. Blue Fox cannot estimate the loss of sales by unauthorised use and illegal copying of the software developed by Blue Fox or distributed by Blue Fox for third parties.
Economies of scale Blue Fox is an international organisation with an extensive worldwide network of sales and distribution offices. Blue Fox hasspecialised internationally in supplying the textile industry with software solutionsin the field of automation of design and production. The textile and fashion industry represents a relatively small niche market within the greater market for ICT products and services. The international structure of Blue Fox, whereby the company aims to provide the best possible service to its (local) customers, is sometimes at odds with the actual size of the various sales and distribution offices. The international operations are generally complex and demand a great deal of attention from the management. International sales and distribution organisations have a relatively high cost structure, due to the limited possibilities that exist for exploiting economies of scale on a global basis.
Third-party software For a number of products, Blue Fox depends on third-party support software. This support software consists, among other things, of operating systems and specific programming languages, as well as separate modules which are being used. The adequate functioning of the software developed by Blue Fox therefore (partly) depends on the adequate functioning of third-party software. By applying application and module tests, Blue Fox aimsto obtain the earliest indication of possible technological problems.
Technological risks Risk of product defects New versions of Blue Fox complex software programs may contain undetected errors or bugs which, despite testing, will be discovered only after a product has been installed and used by customers. To date, Blue Fox business has not seen any material adverse affects from the release of new products and releases.
Software platform The programming languages, technologies and platforms used by Blue Fox have to match and must continue to match the technological developments and requirements of its clients. Blue Fox has made significant investments in recent years in making its software compatible with Microsoft operating environments. Blue Fox must continue to invest to keep up with the latest technological developments.
Financial risks International operations The activities of Blue Fox are exposed to the risks of operating internationally, such as currency fluctuations, general economic developments in certain countries, meeting the requirements of various tax and legal regimes, organisational aspects, unexpected changes in local legislation and regulations, limited protection of intellectual property, varying terms of payment by debtors, trade restrictions and changes in import and cargo rates.
Currency risks Blue Fox carries out part of its activities outside the Euro zone. These activities mainly take place in the United States and the Asia/Pacific region. The management monitors the currency positions and follows a restricted hedging policy, which covers transaction risks, rather than translation risks. The developments in exchange rates of various foreign currencies, especially the US dollar, may therefore affect the result and the financial position of the company.
Working capital management The item trade debtor is relatively large compared to the other current assets of Blue Fox. Blue Fox devotes much attention to debtors' payment performance through permanent debtor management. The insolvency of debtors of the Dutch operating companies is partly covered by a credit insurance policy from Atradius Credit Insurance N.V., as well as through the use of letters of credit or down payments upon the signing of contracts.
Business continuity and Financial position Blue Fox has had a difficult few years. Selling off a number of business units allowed Blue Fox to repay practically all of its long-term debts. The Porini activities were also sold, putting an end to the Microsoft project's continuous need for capital. This fundamentally improved the company's solvency and liquidity levels.
The other side of the coin, however, is the fact that Blue Fox has dramatically been reduced in size, as a result of which the costs of a listing on the stock exchange form a relatively heavy burden on the remaining two business units. A small setback in one of these operations can now have far-reaching consequences for the group results. In addition, the above circumstances have prevented Blue Fox in the past few years from building up a financial buffer to absorb financial blows brought about by, for example, the economic recession. Consequently, Blue Fox' financial position remains vulnerable.
In conjunction with the EU Transparency Directive as incorporated in chapter 5.3 of the Dutch Financial Supervision Act (Wet op het financieel toezicht), the Board of Directors and the Supervisory Board confirm to the best of its knowledge that:
Vianen, 29 April 2009
Pieter Aarts Chief Executive Officer
Jan-Hein Pullens Chief Operating Officer
Servaas Houtakkers Chairman of the Supervisory Board
Leon van den Boom Chairman of the Audit Committee
Dirk Lindenbergh Member of the Supervisory Board
Note 37 Current liabilities, accruals and deferred income 57 Note 38 Long-term liabilities and subordinated loans 58
| Consolidated income statement for 2008 | |||||
|---|---|---|---|---|---|
| Consolidated statement of recognized income and expense | 29 | ||||
| Consolidate balance sheet as at 31 December 2008 | 30 | ||||
| Consolidated statement of cash flows for 2008 | 31 | ||||
| Notes to the consolidated financial statements | 32 | ||||
| General information | 32 | Summary of accounting policies | 33 | ||
| Notes to the consolidated income statement 2008 | 41 | ||||
| Note 3 | Segment reporting | 41 | Note 6 | Other operating costs | 43 |
| Note 4 | Discontinued operations | 42 | Note 7 | Corporate income tax | 43 |
| Note 5 | Wages and salaries and social securities | 43 | |||
| Notes to the consolidated balance sheet | 44 | ||||
| Note 8 | Intangible assets | 44 | Note 18 | Earnings per share | 49 |
| Note 9 | Impairment test for intangible assets | 45 | Note 19 | Diluted earnings per share | 49 |
| Note 10 | Property, plant and equipment | 45 | Note 20 Interest bearing loans and borrowings | 50 | |
| Note 11 | Other investments | 46 | Note 21 | Employee benefits | 50 |
| Note 12 | Deferred tax assets and liabilities | 46 | Note 22 | Provisions | 51 |
| Note 13 | Inventories | 47 | Note 23 | Bank overdraft | 51 |
| Note 14 | Work in progress | 47 | Note 24 Trade and other payables | 51 | |
| Note 15 | Trade and other receivables | 47 | Note 25 | Off-balance sheet commitments | 52 |
| Note 16 | Cash and cash equivalents | 48 | Note 26 Financial instruments | 52 | |
| Note 17 | Shareholders' equity capital and reserves | 48 | Note 27 | Fair values | 52 |
| Notes to the consolidated cash flow statement for 2008 | 53 | ||||
| Note 28 | Cash flow from operating activities | 53 | Note 30 Cash flow from financing activities | 53 | |
| Note 29 Cash flow from investment activities | 53 | ||||
| Company balance sheet as at 31 December 2008 | 54 | ||||
| Company profit and loss account for 2008 | 55 | ||||
| Notes to the company annual accounts 2008 | 55 | ||||
| Note 31 | General | 55 | Note 39 | Provisions | 58 |
| Note 32 | Principles for measurement of assets and | Note 40 Shareholders' equity capital and reserves | 58 | ||
| liabilities and the determination of the result | 55 | Note 41 | Off-balance sheet commitments | 59 | |
| Note 33 | Intangible fixed assets | 55 | Note 42 Options | 59 | |
| Note 34 Tangible fixed assets | 56 | Note 43 Staff | 60 | ||
| Note 35 | Financial fixed assets | 57 | Note 44 Remuneration of the Supervisory | ||
| Note 36 | Other receivables | 57 | Board and Board of Directors | 60 |
Note 45 Audit fees 60
27
| in thousands of euros | notes | 2008 | 2007 restated | |
|---|---|---|---|---|
| Continued operations | ||||
| Net revenue | 9.809 | 11.939 | ||
| Total operating income | [ 3 ] | 9.809 | 11.939 | |
| Raw materials and consumables used | 499 | 712 | ||
| Changes in inventories | -2 | 3 | ||
| Wages and salaries | [ 5 ] | 5.283 | 6.292 | |
| Social security charges | [ 5 ] | 1.213 | 1.022 | |
| Amortization and depreciation | [8,10] | 1.682 | 1.824 | |
| Impairment of goodwill | [ 9 ] | 1.200 | 0 | |
| Other operating costs | [ 6 ] | 3.584 | 4.147 | |
| Capitalized production | [ 8 ] | -1.382 | -1.400 | |
| Total operating costs | 12.077 | 12.600 | ||
| Operating result | -2.268 | -661 | ||
| Financial income | 92 | 155 | ||
| Financial expense | -248 | -541 | ||
| Result from sale of subsidiaries | - | 816 | ||
| Result before income tax | -2.424 | -231 | ||
| Income tax expense | [ 7 ] | 54 | -82 | |
| Result from continued operations | -2.478 | -149 | ||
| Discontinued operations | ||||
| Result from in 2007 discontinued operations | ||||
| (net from income tax) | [ 4 ] | - | 6.223 | |
| Result from in 2008 discontinued operations | ||||
| (net from income tax) | [ 4 ] | -3.704 | -1.458 | |
| Result for the period | -6.182 | 4.616 | ||
| Attributable to: | ||||
| Equity holders of the parent Company | -6.182 | 4.616 | ||
| Minority interest | - | - | ||
| Result for the period | -6.182 | 4.616 | ||
| Earning per share | ||||
| Basic earnings per share (in euros) | -1,39 | 1,16 | ||
| Diluted earnings per share (in euros) | -1,39 | 1,16 | ||
| Earning per share continuing operations | ||||
| Basic earnings per share (in euros) | -0,56 | -0,04 | ||
| Diluted earnings per share (in euros) | -0,56 | -0,04 |
| in thousands of euros | notes | 2008 | 2007 restated | |
|---|---|---|---|---|
| Foreign exchange translation differences | [17] | -67 | 48 | |
| Other charges through equity | [17] | -23 | -41 | |
| Net income recognised directly in equity | -90 | 7 | ||
| Result for the period | [17] | -6.182 | 4.616 | |
| Total recognised income and expense for the period | -6.272 | 4.623 | ||
| Attributable to: | ||||
| Equity holders of the parent Company | -6.254 | 4.653 | ||
| Minority interest | -18 | -30 | ||
| -6.272 | 4.623 |
| in thousands of euros | notes | 31-12-2008 | 31-12-2007 | |
|---|---|---|---|---|
| Non-current assets | ||||
| Property, plant and equipment | [10] | 175 | 312 | |
| Intangible assets | [8,9] | 8.088 | 12.692 | |
| Other investments | [11] | 15 | 45 | |
| Total fixed assets | 8.278 | 13.049 | ||
| Current assets | ||||
| Inventories | [13] | 7 | 21 | |
| Work in progress | [14] | 131 | 171 | |
| Trade and other receivables | [15] | 4.372 | 7.337 | |
| Corporate income tax | [12] | 12 | 2 | |
| Cash and cash equivalents | [16] | 1.720 | 1.059 | |
| Total current assets | 6.242 | 8.590 | ||
| Total assets | 14.520 | 21.639 | ||
| Equity | ||||
| Issued capital | 8.867 | 8.867 | ||
| Share premium | 22.709 | 22.709 | ||
| Legal reserves | 3.499 | 6.700 | ||
| Translation reserves | -71 | -4 | ||
| Accumulated deficit | -24.774 | -32.591 | ||
| Current year's result | -6.182 | 4.616 | ||
| Total equity attributable to equity holders of the parent | 4.048 | 10.297 | ||
| Minority interest | - | 18 | ||
| Total equity | [17] | 4.048 | 10.315 | |
| Non-current liabilities | ||||
| Interest-bearing loans and borrowings | [20] | 2.100 | 1.500 | |
| Employee benefits | [21] | 72 | 630 | |
| Total non-current liabilities | 2.172 | 2.130 | ||
| Current liabilities | ||||
| Bank overdraft | [23] | - | 607 | |
| Interest-bearing loans and borrowings | [20] | 850 | - | |
| Provisions | [22] | - | 124 | |
| Trade and other payables | [24] | 2.728 | 3.778 | |
| Deferred income | 4.722 | 4.685 | ||
| Total current liabilities | 8.300 | 9.194 | ||
| Total liabilities | 10.472 | 11.324 | ||
| Total equity and liabilities | 14.520 | 21.639 | ||
| in thousands of euros | notes | 2008 | 2007 | |
|---|---|---|---|---|
| Operating result | -2.530 | -1.256 | ||
| Depreciation and amortization | 3.178 | 2.965 | ||
| Change in inventories and work in progress | 27 | 4 | ||
| Change in trade and other receivables | -772 | -3.540 | ||
| Change in trade and other payables | 1.780 | 4.087 | ||
| Change in provisions / employee benefits | -6 | -1.250 | ||
| Interest paid | -202 | -440 | ||
| Corporate income tax | -87 | -108 | ||
| Cash flow from operating activities | [28] | 1.388 | 462 | |
| Investments: | ||||
| Intangible assets | -1.728 | -3.049 | ||
| Property, plant and equipment | -117 | -160 | ||
| Disposals: | ||||
| Property, plant and equipment | - | 55 | ||
| Disposal of subsidiaries, net of cash disposed of | 300 | 7.066 | ||
| Exchange rate differences | -55 | -48 | ||
| Cash flow from investment activities | [29] | -1.600 | 3.864 | |
| Net proceeds from issue of shares | - | 2.424 | ||
| Granted loans | 1.450 | 1.500 | ||
| Redemption loans | 30 | -4.096 | ||
| Cash flow from financing activities | [30] | 1.480 | -172 | |
| Change in liquid assets | 1.268 | 4.154 | ||
| Cash and cash equivalents | 1.059 | 3.156 | ||
| Bank overdraft | -607 | -6.992 | ||
| Balance related to assets held for sale | - | 134 | ||
| Balance at 1 January | 452 | -3.702 | ||
| Cash and cash equivalents | 1.720 | 1.059 | ||
| Bank overdraft | - | -607 | ||
| Balance related to assets held for sale | - | - | ||
| Balance at 31 December | 1.720 | 452 | ||
| Change in liquid assets | 1.268 | 4.154 |
The company The company was incorporated on 10 May 1999. Its founders were the shareholders of Blue Fox Enterprises B.V., who brought in the share capital of Blue Fox Enterprises B.V. Blue Fox Enterprises N.V. is a holding company, which holds 100% participations in a number of companies. Blue Fox is a global provider of integrated specialised design, production and planning software for the textile and apparel industry.
Authorization These financial statements have been authorized by the Board of Directors on 29 April 2009. The General Meeting of Shareholders has the power to amend the financial statements.
Share issues The shares of Blue Fox Enterprises N.V. have been listed on the Official Market of Euronext Amsterdam N.V. since 21 May 1999. As at 31 December 2008, the number of outstanding Blue Fox Enterprises N.V. shares was 4,433,702 (2007: 4,433,702).
The limited sum received for the Porini activities and the expectations for the second half of 2008 were reasons for Blue Fox to raise additional funding of € 850,000. On an extraordinary meeting of shareholders, held on 12 December 2008, it was decided to raise this capital through a new share issue by means of a convertible loan, with issue price of € 0,30. In order to realize this the nominal value had to be decreased from € 2,00 to € 0,10.
Such a decrease issubject to a two-month objection period deferring the actual issue into 2009. Therefore, it was decided to issue a convertible loan of € 850,000 to cover the time between capital requirement and the effectuation of the issue. The loan, with the obligation to convert as soon as the nominal value of the Blue Fox shares had been reduced, had a conversion price of € 0.30 and was fully paid up by Blue Fox' main shareholders. The loan pays 10% interest per annum, payable in shares. This means that 2,897,652 new shares were issued in 2009 to raise € 850,000 additional capital.
The number of shares outstanding per 31 December 2008 is 4,433,702 with a nominal value of € 2.00, resulting in a share capital of € 8,867,404 at the end of 2008. After decreasing the nominal value of the Blue Fox shares to € 0.10 and issuing the new shares in 2009, the new share capital will be € 733,135 and the new share premium will be € 31,712,696.
Changes in group companies in 2008 On 26 June 2008, the company announced the sale of its subsidiaries Blue Fox Porini Srl (wholly owned), Blue Fox Porini Lda (51% shareholding), Blue Fox Porini Textile Inc. (wholly owned) and of the Microsoft-certified ERP software that has been programmed in Blue Fox MDP B.V. (together referred to as "the Porini activities").
The continuing financing needs of the Porini activities laid such a claim on the working capital of the other Blue Fox activities that further investments in Porini could no longer be justified. A limited acquisition sum was agreed with the buyer, resulting in a book loss of € 3.4 million.
Specialised in ERP software for the Textile and Apparel industry, the Porini activities represented a separate operation. Therefore, the results of the Porini activities have been included in 'discontinued operations'. The comparative figures for 2007 have been restated accordingly.
Changes in group companies 2007 In the first half of 2007, the company successfully divested three operating companies: Carrier to Carrier Telecom N.V., NedGraphics CAD/GIS B.V. and Pollux B.V. With these transactions, a book profit of € 6.5 million was realised. The results of these former subsidiaries have been included in the financial statements under 'discontinued operations'.
Going concern In 2008, additional funding was raised through an additional loan with the current financer of € 0.6 million (June 2008) and the issue of an obligatory convertible loan of € 0.9 million (December 2008). Both the existing € 1.5 million loan and the newly attracted € 0.6 million loan have been rolled over to the end of 2010. The convertible loan will be converted in early 2009 at a conversion rate of € 0.30. This resulted in equity of € 4,048, interest bearing loans of € 2,950 and a solvency rate of 33.7%.
In 2009, the cash balances are expected to be positive throughout the year and therefore it is expected that no additional funding will be required. This expectation is based on management's forecast and plans for 2009. These plans are based on a turnaround scenario and include, but are not limited to, cost savings contingency plans in case revenue does not develop as expected. The trough of the cash position for 2009 does not provide for much headroom for unanticipated developments, but the cash position is expected to improve in the fourth quarter of 2009. At the end of 2010 the non current loan will mature. The ability to refinance this loan and to continue as a going concern in the year 2010 and thereafter will depend on the profitability and positive cash flows of the Company. Management is confident that they will restore profitability.
Notes to the financial statements: IFRS Accounting principles Blue Fox Enterprises N.V. ('The Company') is located in Vianen, the Netherlands. The consolidated financial statements of the company for the year ended 31 December 2008 comprise the company and its subsidiaries (together referred to as the 'Group') and the Group's interest in associates and jointly controlled entities.
Statement of compliance The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union and with Part 9 of Book 2 of the Netherlands Civil Code.
Basis of preparation The financial statements are presented in euros, which is the company's functional currency, rounded to the nearest thousand. They are prepared on the historical cost basis, unless otherwise stated.
The preparation of financial statements in accordance with IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
The accounting policies set out below have been applied consistently to all periods and by all Group entities presented in these consolidated financial statements.
Judgements made by management in the application of IFRS that have significant effect on the financial statements and estimates with a significant risk of material adjustment in the next year are discussed in the notes to the financial statements. In particular, information about significant areas of estimation, uncertainty and critical judgements regarding the application of the accounting principles that have the most significant impact on the amounts recognised in the financial statements are described in note 7 - determination of the recoverable amount of cash generating units, and note 9 - deferred tax assets and liabilities.
Basis of consolidation Subsidiaries Subsidiaries are entities controlled by the company. Control exists when the company has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that presently are exercisable or convertible are taken into account. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. The consolidation (fully) includes Blue Fox Enterprises N.V. and the following group companies:
| 2008 | 2007 | |
|---|---|---|
| Blue Fox Enterprises B.V. the Netherlands (Vianen) | 100% | 100% |
| Blue Fox IPR B.V. the Netherlands (Vianen) | 100% | 100% |
| Blue Fox MDP B.V. the Netherlands (Vianen) | 100% | 100% |
| TOPCAD B.V. the Netherlands (Vianen) | 100% | 100% |
| NedGraphics CAD/GIS B.V. the Netherlands (Vianen) | 100% | 100% |
| Blue Fox NedGraphics B.V. the Netherlands (Vianen) | 100% | 100% |
| Blue Fox NedGraphics BvBa Belgium (Deerlijk) | 100% | 100% |
| Blue Fox NedGraphics of Tennessee Inc. USA (Chattanooga) | 100% | 100% |
| Blue Fox NedGraphics Ltd. UK (Dukinfield) | 100% | 100% |
| Blue Fox NedGraphics SA France (Paris) | 100% | 100% |
| Blue Fox NedGraphics Inc. USA (New York) | 100% | 100% |
| Blue Fox Srl Romania (Bucharest) | 100% | 100% |
| Blue Fox Porini Srl Italy (Lomazzo) | 0% | 100% |
| Dynamics Perspective Inc. USA (Los Angeles) | 100% | 100% |
| Blue Fox Porini Lda Portugal (Matosinhos) | 0% | 51% |
| Blue Fox Porini Textile Inc. USA (Chattanooga) | 0% | 100% |
| Blue Fox NedGraphics Srl Italy (Lomazzo) | 100% | 0% |
Blue Fox Porini Srl, Blue Fox Porini Lda and Blue Fox Porini Textile Inc were sold in June 2008. Actual control ceased in April 2008. The results that have been realized in the first quarter of 2008 have been included in the consolidated results.
Blue Fox MDP B.V. sold its activities in June 2008. Actual transfer of control over the assets took place in April 2008. The results that have been realized in the first quarter of 2008 have been included in the consolidated results.
NedGraphics Italy Srl has been incorporated as per 1 July 2008.
Transactions eliminated on consolidation Intragroup balances and any unrealised gains and losses or income and expenses arising from intragroup transactions, are eliminated in preparing the consolidated financial statements.
Foreign currency Foreign currency transactions Transactions in foreign currencies are translated at the foreign exchange rate applicable at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated to euro at the foreign exchange rate applicable at that date. Foreign exchange differences arising on translation are recognised in the income statement. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair value are translated to euro at foreign exchange rates ruling at the dates the fair value was determined.
Financial statements of foreign operations The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on consolidation, are translated to euro at foreign exchange rates ruling at the balance sheet date. The revenues and expenses of foreign operations are translated to euro at the foreign exchange rates at the dates of the transactions.
Net investment in foreign operations Exchange differences arising from the translation of the net investment in foreign operations, and of related hedges are taken to a translation reserve. They are released into the income statement upon disposal.
In respect of all foreign operations, any differences that have arisen from 1 January 2004, the date of transition to IFRS, are presented in the translation reserve, a separate component of equity.
Property, plant and equipment Owned assets Items of property, plant and equipment are stated at cost less accumulated depreciation (see below) and impairment losses. Cost includes expenditures that are directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials, direct labour, the initial estimate, where relevant, of the costs of dismantling and removing the items and restoring the site on which they are located, and an appropriate proportion of production overheads.
Where parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items of property, plant and equipment.
Leased assets Leased assets of which the Group assumes virtually all the risks and rewards of ownership are classified as finance leases. The owner-occupied property acquired by way of finance lease is stated at an amount equal to the lower of its fair value and the present value of the minimum lease payments at inception of the lease, less accumulated depreciation (see below) and impairment losses. The property held under finance leases and leased out under operating lease is classified as investment property and stated at the fair value model. Lease payments are accounted for as described in the accounting policy. Property held under operating leases that would otherwise meet the definition of investment property may be classified as investment property on a property-by-property basis.
Subsequent costs The Group recognises in the carrying amount of an item of property, plant and equipment the cost of replacing part of such an item when that cost is incurred if it is probable that the future economic benefits embodied with the item will flow to the Group and the cost of the item can be measured reliably. All other costs are recognised in the income statement as an expense as incurred.
Depreciation Depreciation is charged to the income statement on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment. The estimated useful lives are as follows:
The residual value and the useful life of an asset shall be reviewed annually at financial year-end.
Intangible assets Goodwill All business combinations are accounted for by applying the purchase accounting method. Goodwill represents amounts arising on the acquisition of subsidiaries, associates and joint ventures. In respect of business acquisitions that have occurred since 1 January 2004, goodwill represents the difference between the cost of the acquisition and the fair value of the net identifiable assets acquired.
In respect of acquisitions prior to this date, goodwill is included on the basis of its deemed cost, which represents the amount recorded under previous GAAP.
Goodwill is stated at cost less any accumulated impairment losses. Goodwill is allocated to cash-generating units and is no longer amortised but is tested annually for impairment.
Negative goodwill arising on an acquisition is recognised directly in profit or loss.
Research and development Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and understanding, is recognised in the income statement as expenses are incurred.
Expenditure on software development activities, whereby research findings are applied to a plan or design for the production of new orsubstantially improved products and processes, is capitalised if the product or process is technically and commercially feasible and the Group has sufficient resources to complete development. Capitalisation only occurs when future economic benefits are probable and it is expected that the asset will be used or sold. The expenditure capitalised includes the cost of materials, direct labour and an appropriate proportion of overheads, when these are directly attributable to preparing the assets for its intended use. Other development expenditure is recognised in the income statement as an expense as incurred. Capitalised software development expenditure is stated at cost less accumulated amortisation (see below) and impairment losses.
Other intangible assets Other intangible assets that are acquired by the Group are stated at cost less accumulated amortisation (see below) and impairment losses.
Expenditure on internally generated goodwill and brands is recognised in the income statement as expenses incurred.
Subsequent expenditure Subsequent expenditure on capitalised intangible assets is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is expensed as incurred.
Amortisation Amortisation is charged to the income statement on a straight-line basis over the estimated useful lives of intangible assets unless such lives are indefinite. Goodwill and intangible assets with an indefinite useful life are systematically tested for impairment at each balance sheet date. Other intangible assets are amortised from the date they are available for use. The estimated useful lives are as follows:
Work in progress Work in progress is stated at cost plus profit recognised to date less a provision for foreseeable losses and less progress billings. Cost includes all expenditure related directly to specific projects and an allocation of fixed and variable overheads incurred in the Group's contract activities based on normal operating capacity.
The terms billed relating to work in progress are deducted from work in progress. Any possibly resulting negative balance of work in progress is shown as a liability under short term debts.
Trade and other receivables Trade and other receivables are initially stated at fair value. Subsequently, trade and other receivables are valued at amortised cost less impairment losses.
Inventories Inventories are stated at the lower of cost and net realisable value. The cost of inventories is based on the first-in first-out principle and includes expenditure incurred in acquiring the inventories and bringing them to their existing location and condition. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.
Cash and cash equivalents Cash and cash equivalents comprise cash balances and call deposits. Bank overdrafts that are repayable on demand and form an integral part of the Group's cash management are included as a component of cash and cash equivalents for the purpose of the statement of cash flows.
Impairment The carrying amounts of the Group's assets, other than inventories and deferred tax assets, are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the asset's recoverable amount is estimated.
For goodwill, assets that have an indefinite useful life and intangible assets that are not yet available for use, the recoverable amount is estimated at each balance sheet date, or when there is an indication of impairment.
An impairment lossisrecognised whenever the carrying amount of an asset or its cash-generating unit exceedsitsrecoverable amount. Impairment losses are recognised in the income statement.
Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to cash-generating units (group of units) and then, to reduce the carrying amount of the other assets in the unit (group of units) on a pro rata basis.
When a decline in the fair value of an available-for-sale financial asset has been recognised directly in equity and there is objective evidence that the asset is impaired, the cumulative loss that had been recognised directly in equity is recognised in profit or loss even though the financial asset has not been derecognised. The amount of the cumulative loss that is recognised in profit or loss is the difference between the acquisition cost and current fair value, less any impairment loss on that financial asset previously recognised in profit or loss.
Calculation of recoverable amount The recoverable amount of the Group's investments in held-to-maturity securities and receivables carried at amortised cost is calculated as the present value of estimated future cash flows, discounted at the original effective interest rate (i.e., the effective interest rate computed at initial recognition of these financial assets). Receivables with a short duration are not discounted.
The recoverable amount of other assets is the greater of their fair value less costs to sell and their value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit to which the asset belongs.
Reversals of impairment An impairment loss in respect of a held-to-maturity security or receivable carried at amortised cost is reversed if the subsequent increase in recoverable amount can be related objectively to an event occurring after the impairment loss was recognised.
An impairment loss in respect of an investment in an equity instrument classified as available for sale is not reversed through profit or loss. If the fair value of a debt instrument classified as available-for-sale increases and the increase can be objectively related to an event occurring after the impairment loss was recognised in profit or loss, the impairment loss shall be reversed, with the amount of the reversal recognised in profit or loss. An impairment loss in respect of goodwill is not reversed.
In respect of other assets, an impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount.
An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
Share capital Repurchase of share capital When share capital recognised as equity is repurchased, the amount of the consideration paid, including directly attributable costs, is recognised as a change in equity. Repurchased shares are classified as treasury shares and presented as a deduction from total equity.
Convertible notes Convertible notes that can be converted to share capital at the option of the holder, where the number of shares issued does not vary with changes in their fair value, are accounted for as compound financial instruments. Transaction costs that relate to the issue of a compound financial instrument are allocated to the liability and equity components in proportion to the allocation of proceeds. The equity component of the convertible notes is calculated as the excess of the issue proceeds over the present value of the future interest and principal payments, discounted at the market rate of interest applicable to similar liabilities that do not have a conversion option. The interest expense recognised in the income statement is calculated using the effective interest rate method.
Interest-bearing borrowings Interest-bearing borrowings are recognised initially at fair value less attributable transaction costs. Subsequent to initial recognition, interest-bearing borrowings are stated at amortised cost with any difference between cost and redemption value being recognised in the income statement over the period of the borrowings on an effective interest basis.
Employee benefits Defined contribution plans Obligations for contributions to defined contribution pension plans are recognised as an expense in the income statement as incurred.
Provisions A provision is recognised in the balance sheet when the Group has a present legal or constructive obligation as a result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation, and when this outflow can be estimated reliably. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.
Restructuring A provision for restructuring is recognised when the Group has approved a detailed and formal restructuring plan, and the restructuring has either commenced or has been announced publicly. Future operating costs are not provided for.
Onerous contracts A provision for onerous contracts is recognised when the expected benefits to be derived by the Group from a contract are lower than the unavoidable cost of meeting its obligation under the contract.
Trade and other payables Trade and other payables are stated at amortised cost. The initial recognition is at fair value less attributable transaction costs.
Revenue Net revenue include the income from sales and supply of goods and services less discounts, agents' commissions, bonuses and sales taxes. Profit on work in progress is taken pro rata to the progress of the project ('percentage of completion method').
A large part of sales concerns income from the selling of software licences, as well as providing related services such as supplying maintenance, support and training with regard to in-house developed software. In addition, income is generated by performing and supervising software and hardware implementations as well as tailoring in-house developed software to specific customers' needs.
Software arrangements range from those that provide a license for a single software product ('standard software') to those that, in addition to the delivery of software or a software system, require a significant production, modification, or customization of the software. If an arrangement to deliver software or a software system, either alone or together with other products or services, requires significant production, modification, or customization of the software, the entire arrangement has to be accounted for in conformity with contract-accounting (for construction contracts).
Sale of software License fee revenue from standard software is recognised in the income statement when the significant risks and rewards of ownership have been transferred to the buyer. No revenue is recognised if there are significant uncertainties regarding recovery of the consideration due, associated costs or the possible return of the software.
The license fee income from standard software is recognised when all of the following conditions are met:
Software services If an arrangement to deliver software or a software system, requires significant production, modification, or customization of the software, revenue should be recognized using the 'percentage of completion'-method. The actual delivery of the non-standard software is therefore not regarded as the realisation moment for software that requires significant production, modification or customization. Revenue related to the delivery of non-standard software is accounted for pro rata to the progress of the project, which comprises the complete installation, modification and customizing of the software in the client's environment.
When the outcome of a project can be estimated reliably, contract revenue and expenses are recognised in the income statement in proportion to the stage of completion of the contact. The stage of completion is assessed by reference to surveys of work performed. If such estimates can not be made reliably or surveys regarding the work performed are not available, all contract revenue is deferred and is accounted for on the basis of completed contract.
No revenue is recognised if there are significant uncertainties regarding recovery of the consideration due, associated costs or the possible return of the software. An expected loss on a contract is immediately recognised in the income statement.
Maintenance and Support revenue The services with regard to performing maintenance and support are contractually agreed with customers. The maintenance and support agreements contain the records of support received over the telephone by a helpdesk and of obtained patches as well as obtained new versions ('updates') of licensed software.
The income from the maintenance and support contractsisrecognised over and attributed to the period to which the income relates. This period will generally be a 12-month period. Unrealised income, consisting of the unrealised and therefore deferred part of the income from these maintenance and support contracts, is stated under short-term debts.
Goods sold and services rendered Revenue from the sale of goods is recognised in the income statement when the significant risks and rewards of ownership have been transferred to the buyer. Revenue from services rendered is recognised in the income statement in proportion to the stage of completion of the transaction at the balance sheet date. The stage of completion is assessed by reference to surveys of work performed. No revenue is recognised if there are significant uncertainties regarding recovery of the consideration due, associated costs or the possible return of goods also continuing management involvement with the goods.
Capitalised production for own company The income from capitalised production for own company relates to the capitalisation of software development costs with regard to in-house developed software and is accounted for in operating costs.
Expenses Operating lease payments Payments made under operating leases are recognised in the income statement on a straight-line basis over the term of the lease. Lease incentives received are recognised in the income statement as an integral part of the total lease expense.
Finance lease payments Minimum lease payments are apportioned between the finance charge and the reduction of the outstanding liability. The finance charge is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.
Finance income and expenses Finance income comprises interest income on funds invested, dividend income gains on the disposal of available-for-sale financial assets, changes in the fair value of financial assets at fair value through profit or loss, and foreign currency gains. Interest income is recognised as it accrues, using the effective interest method. Dividend income is recognised on the date that the right to receive payment is established, which in the case of quoted securities is the ex-dividend date.
Finance expense comprises interest expense on borrowings, unwinding of the discount on provisions, dividend on preference shares classified as liabilities, foreign currency losses, changes in the fair value of financial assets at fair value through profit or loss, and impairment losses recognised on financial assets. All borrowing costs are recognised in profit or loss using the effective interest method.
Income tax Income tax on the profit or loss for the year comprises current and deferred tax. Income tax is recognised in the income statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.
Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The following temporary differences are not provided for: taxable temporary differences arising from the initial recognition of goodwill, the initial recognition of assets or liabilities that affect neither
accounting nor taxable profit, and differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantially enacted at the balance sheet date.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised.
Additional income taxes that arise from the distribution of dividends are recognised at the same time as the liability to pay the related dividend.
Minority interests Minority interests are valued at the third party interest in the net asset value, determined in accordance with the accounting principles of the Group.
Segment reporting A segment is a distinguishable component of the Group that is engaged either in providing products or services (business segment), or in providing products or services within a particular economic environment (geographical segment), which is subject to risks and rewards that are different from those of other segments.
Non-current assets held for sale and discontinued operations Assets are classified as assets held for sale and stated at the lower of the carrying amount and fair value less costs to sell if their carrying amount is recovered principally through a sale transaction rather than through continuing use.
Immediately before classification as held for sale, the measurement of the assets (and all assets and liabilities in a disposal group) is brought up-to-date. Then, on initial classification as held for sale, non-current assets and disposal groups are recognised at the lower of carrying amount and fair value less costs to sell.
Impairment losses on initial classification as held for sale are included in profit or loss, even when there is a revaluation. The same applies to gains and losses on subsequent remeasurement.
A discontinued operation is a component of the Group's business that represents a separate major line of business or geographical area of operations or is a subsidiary acquired exclusively with a view to resale.
Classification as a discontinued operation occurs upon disposal or when the operation meets the criteria to be classified as held for sale, if earlier. A disposal group that is to be abandoned may also qualify. Upon classification as a discontinued operation, the income statement is restated as if the operation has been discontinued from the start of the comparative period.
IFRIC 11 Group and Treasury Share Transactions (effective for annual periods beginning on or after 11 March 2007). Group and treasury share transactions require a share-based payment arrangement in which an entity receives goods or services as consideration for its own equity instruments to be accounted for as equity-settled share base payment transaction regardless of how the equity instruments are obtained. This interpretation does not have an impact on the group's financial statements 2008.
IFRIC 14 The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction clarifies when refunds or reductions in future contributions in relation to defined benefit assets should be regarded as available and provides guidance on the impact of minimum funding requirements on such assets. This interpretation does not have an impact on the group's financial statements 2008.
Management has assured that no other new interpretations are applicable.
IFRS 8 Operating Segments (effective for annual periods beginning on or after 1 January 2009) has been adopted early by Blue Fox in 2008. This standard replaced IAS 14 'Segment Reporting' and introduces the "management approach" to segment reporting. Consequently, this requires the disclosure of the segment information based on internal reports regularly reviewed by the group operating decision makers in order to assess each segment's performance and to allocate resources to them. More about Blue Fox segments can be found in note 3 on page 41.
A number of new standards, amendments to standards and interpretations were not yet effective in 2008 and have not, therefore, been applied to these consolidated financial statements. These standards, amendments to standards and interpretations are not expected to have any significant effect on the consolidated financial statements.
IFRS 3 Business Combinations - Comprehensive revision on applying the acquisition method (effective for annual periods beginning on or after 1 July 2009). This revised standard continues to apply the acquisition method to business combinations, with significant changes. The most important changes for the Group will be expensing all acquisition-related costs and the remeasurement of contingent considerations through the statement of income. The group will apply IFRS 3 (revised) prospectively to all business combinations from 1 January 2010, subject to the endorsement by the EU.
IAS 19 Employee Benefits amendment (effective from 1 January 2009) clarifies that a change to a plan that results in a change to the scope of the benefits affected by future salary increases is a curtailment, while an amendment that changes benefits attributable to past service costs give rise to negative past service costs if it results in a reduction in the present value of the defined benefit obligation.
Following a number of divestmentsin 2007, the currentsegmentation does not hold anymore. Due to the sale of CadGis BV and Pollux BV in 2007 the entire Engineering and Geographical Information Software Division was divested. The sale of Carrier 2 Carrier led to the disposal of the 'others' division.
This leaves only one segment for 2008: the 'Textile and Apparel Software' division, disclosure of which would not lead to additional insight. Blue Fox has therefore opted for early adoption of IFRS 8 – Operating Segments. IFRS 8 requires disclosure of the segmentation that management uses for its decision making. Blue Fox management uses the operating companies to steer and allocate resources to the different divisions. This leads to the following segmentation:
The 'other' segment comprises the results of the holding and discontinued operations of 2007. Mentioned segments differ as to products, customers, market approach and business risks. The table below shows the results per segment.
Inter-segment pricing is determined on an arm's length basis.
Segmentresults, assets and liabilitiesinclude items directly attributable to a segment aswell asthose that can be allocated on a reasonable basis.Unallocated items comprise mainly income-earning assets and revenue, interest-bearing loans, borrowings and expenses, and corporate assets and expenses.
The segment capital expenditure isthe total costincurred during the period to acquire segment assetsthat are expected to be used formore than one period.
| Operating segments' | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Profit, Loss, Assets and liabilities | EMEA | USA | Porini | DPI | Other | Total | ||||||
| 2008 | 2007 | 2008 | 2007 | 2008 | 2007 | 2008 | 2007 | 2008 | 2007 | 2008 | 2007 | |
| Software | 2.538 | 3.535 | 1.031 | 1.512 | 170 | 608 | 151 | 330 | 0 | 117 | 3.890 | 6.102 |
| Maintenance | 1.850 | 1.881 | 2.473 | 2.543 | 184 | 649 | 496 | 5570 | 0 | 657 | 5.003 | 6.287 |
| Other | 501 | 705 | 356 | 394 | 874 | 2.859 | 413 | 482 | 0 | 9.354 | 2.144 | 13.794 |
| Revenue from external | ||||||||||||
| customers | 4.889 | 6.121 | 3.860 | 4.449 | 1.228 | 4.116 | 1.060 | 1.369 | 0 | 10.128 | 11.037 | 26.183 |
| IC revenue | 3.800 | 2.581 | 25 | 25 | 311 | 757 | 0 | 0 | 0 | 0 | 8.272 | 6.726 |
| Operating expenses | 6.077 | 5.989 | 2.206 | 2.470 | 1.560 | 6.063 | 1.123 | 2.267 | 1.150 | 10.741 | 12.116 | 27.530 |
| Capital expenditure | 1.382 | 1.400 | 0 | 0 | 345 | 1.365 | 0 | 0 | 0 | 282 | 1.727 | 3.047 |
| Depreciation and amortization | 1.430 | 1.519 | 38 | 50 | 296 | 859 | 6 | 11 | 208 | 519 | 1.978 | 2.958 |
| Impairment ofsegment assets | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 1.200 | 0 | 1.200 | 0 |
| Interest revenue | 3 | 6 | 28 | 5 | 6 | 0 | 0 | 1 | 61 | 157 | 98 | 169 |
| Interest expense | -2 | -3 | -1 | 39 | -43 | -112 | -24 | -51 | -220 | -524 | -290 | -651 |
| segment profit before tax | 233 | 1.678 | 157 | 236 | -298 | -1.411 | -97 | -1.025 | -2.717 | -1.217 | -2.722 | -1.740 |
| Corporate income tax | 27 | 21 | 26 | 49 | 13 | 64 | 1 | 3 | 0 | 0 | 67 | 137 |
| Intangible segment assets | 3.975 | 3.910 | 0 | 0 | 0 | 3.270 | 0 | 0 | 4.113 | 5.513 | 8.088 | 12.693 |
| Other segment assets | 3.172 | 3.738 | 3.127 | 3.221 | 100 | 2.158 | 447 | 584 | 4.722 | 4.048 | 6.432 | 8.946 |
| Segment liabilities | 3.548 | 2.955 | 2.878 | 3.131 | 3.307 | 5.482 | 1.360 | 1.494 | 4.445 | 3.083 | 10.472 | 11.342 |
Contrary to the activities of previously discontinued operations, the currently continued activities operate mainly on a global scale. Therefore, due to the sale of Carrier 2 Carrier, CadGis and Pollux in 2007, the revenue from external customers in the Netherlands has decreased from € 10.4 million in 2007 to € 0.2 million in 2008. Non-current assets related to the Netherlands amount to € 12.3 million (2007: € 14.2 million). Blue Fox has a diverse customer base of over 3.500 customers in many countries and of various sizes. The company does not rely on a single customer or a single group of customers for its operations.
Discontinued operations The results of the Porini activities have been deconsolidated as per April 2008. With the current segmentation in place, the Porini activities represent an entire segment and therefore, the results of the Porini activities have been recognised under 'discontinued operations' in the income statement. The comparative figures for 2007 have been adjusted accordingly. 4
Because the company also sold its entire Engineering and Geographical Information Software (GIS) Division segment in 2007, the results of 'discontinued operations' in 2007 include those of both the Porini activities and the Engineering and GIS division. Discontinued operations in 2008 include only the results of the Porini activities.
The income statement below has been re-presented to show the discontinued operations separately from continuing operations.
| Results of discontinued operations | |||
|---|---|---|---|
| in thousands of euros | 2008 | 2007 restated | |
| Revenue | 1.228 | 14.244 | |
| Expenses | 1.551 | 15.415 | |
| Result on Product Development | 62 | 575 | |
| Operating result | -261 | -596 | |
| Interest income (expense) | -37 | -95 | |
| Income tax expense | 13 | 220 | |
| Minority interest | 5 | -17 | |
| Result from operating activities, net of income tax | -316 | -894 | |
| Gain on sale of discontinued operation | -3.388 | 5.659 | |
| Result for the period | -3.704 | 4.765 | |
| Basic earnings (loss) per share (€) | -0,84 | 1,20 | |
| Diluted earnings (loss) per share (€) | -0,84 | 1,19 | |
| Cash flows from (used) discontinued operations | |||
| in thousands of euros | 2008 | 2007 | |
| Net cash from operating activities | 316 | 2.604 | |
| Net cash from investing activities | -78 | 4.962 | |
| Net cash from financing activities | - | - | |
| Net cash from (used in) discontinued operations | 238 | 7.566 | |
| Effect of disposal on the financial position of the group | |||
| in thousands of euros | |||
| Property, plant, equipment | -75 | ||
| Inventories | -27 | ||
| Intangible fixed assets | -3.332 | ||
| Trade and other receivables | -3.747 | ||
| Cash and cash equivalents | 456 | ||
| Trade and other payables | 2.906 | ||
| Provisions | 552 | ||
| Net assets and liabilities | -3.267 | ||
| Consideration received, satisfied in cash | -156 | ||
| Cash disposed of | 456 | ||
| Net cash outflow | 300 |
| Total wages and salaries and social security charges | 6.496 | 7.314 | |
|---|---|---|---|
| Increase in liability for long service benefits | 6 | - | |
| Contribution to defined contributionplans | 408 | 233 | |
| Social security charges | 799 | 789 | |
| Wages and salaries | 5.283 | 6.292 | |
| in thousands of euros | 2008 | 2007 restated | |
Staff During 2008, the group had an average of 138 staff members (2007: 215). This staff can be divided as follows over the various divisions:
| Staff over the various divisions | ||
|---|---|---|
| in average FTE | 2008 | 2007 restated |
| Management and staff holding company | 3 | 6 |
| Textile and Apparel Software division (CAD/CAM) | 107 | 101 |
| Textile and Apparel Software division (ERP) | 28 | 85 |
| Engineering and Geographic Information Software division | - | 23 |
| Total number of staff members | 138 | 215 |
| Sales costs 229 Housing costs 827 Car costs 270 Other staff costs 538 General costs 1.814 |
Currency and exchange rate differences | -94 | 64 |
|---|---|---|---|
| 2.477 | |||
| 528 | |||
| 216 | |||
| 831 | |||
| 31 | |||
| in thousands of euros 2008 |
2007 restated |
Corporate income tax The activities of the Blue Fox group are subject to corporate income taxes of various countries, with tax rates between 21.4% and 40%. We should note that in the case of a relatively low nominal tax rate, not all the costs incurred are tax deductible. The various tax rates and the presence of unrealised tax loss carry forwards are the cause of a deviation of the actual weighted tax pressure and the nominal tax rate in the Netherlands (25.5%). 7
For the fiscal unit for corporate income tax with respect to the Dutch entities all years up until 2006 have been filed and settled.
The reconciliation of the nominal and the effective tax pressure is as follows:
| Corporate income tax | ||
|---|---|---|
| ---------------------- | -- | -- |
| in thousands of euros | 2008 | 2007 restated | |
|---|---|---|---|
| Result from ordinary activities before taxation | -6.110 | 4.737 | |
| Impairment of acquisition goodwill (non-deductible) | 1.200 | - | |
| Result sale of participating interests | 3.388 | -6.475 | |
| Of which related to taxable result on asset sale | -1.856 | 206 | |
| Taxable income | -3.378 | -1.532 | |
| Weigthed average taxation | -1.128 | -618 | |
| Valuation adjustment fiscal losses carry forward | 1.072 | 515 | |
| Non deductible items | 123 | 241 | |
| Tax for the year | 67 | 138 | |
| Current year tax | 67 | 138 | |
| Deferred tax | - | - | |
| Total tax for the year | 67 | 138 |
Deferred tax assets have been recognised in the annual accounts for as far as they can be reasonably expected to be realised within the foreseeable future. The deferred tax effect on the tax charge for the year relates to changes in (un-)recognised temporary differences.
| costs of software | costs of obtained | total | total | |||
|---|---|---|---|---|---|---|
| in thousands of euros | goodwill | development | rights and patents | 2008 | 2007 | |
| Costs 1 January | 21.106 | 18.529 | 43 | 39.678 | 42.812 | |
| Accumulated amortization 1 January | -15.852 | -11.091 | -43 -26.986 -28.442 | |||
| Book value as at 1 January | 5.254 | 7.438 | - | 12.692 | 14.370 | |
| Changes: | ||||||
| Investments | - | 1.728 | - | 1.728 | 3.049 | |
| Disposals | - | -3.332 | - | -3.332 | -6.192 | |
| Amortization and depreciation | - | -1.517 | - | -1.517 | -2.705 | |
| Depreciation on disposals | - | -283 | - | -283 | 4.161 | |
| Impairment | -1.200 | - | - | -1.200 | - | |
| Other value changes | - | - | - | - | 9 | |
| -1.200 | -3.404 | - | -4.604 | -1.678 | ||
| Costs 31 December | 21.106 | 16.925 | 43 | 38.074 | 39.678 | |
| Accumulated amortization | ||||||
| 31 December | -17.052 | -12.891 | -43 -29.986 -26.986 | |||
| Book value as at 31 December | 4.054 | 4.034 | - | 8.088 | 12.692 |
8 Intangible assets Movements were as follows: The following amortisation/depreciation percentages are used:
| Costs of software development | 10-20 |
|---|---|
| Costs of obtaining rights and patents | 20 |
%
Costs of software development include an amount of € 2.0 million, relating to the software obtained by the acquisition of NedGraphics. Contrary to in-house developed software, which is depreciated in five years, this third-party obtained software is depreciated in ten years (carrying value: € 0.5 million).
Impairment test for intangible assets Intangible assets comprise software on the one hand and goodwill on the NedGraphics division on the other hand. In both respects, the NedGraphics division is the lowest cash generating unit. The recoverable amount of cash-generating units is based on a value-in-use calculation. This calculation is based on the budget for 2009. Cash flows for further periods are extrapolated using a 2% growth rate. A pre-tax discount rate of 13.6% has been used in discounting the projected cash flows, which corresponds with a post-tax discount rate of 12.1%. Effects of tax assets and allocation of holding expenses have been taken into account too. Key assumption in the 2009 budget is that revenue will return to around 2007 level, and, if not, that sufficient cost savings can be achieved compared to the budget 2009, so that the effect of lower revenue will be offset. Any adverse change in this assumption would result in an increase in the impairment charge recorded in 2008. 9
Based on the impairment test the recoverable amount of this cash-generating unit is lower than the carrying amount. As a result, the goodwill on NedGraphics wasimpaired for an amount of € 1.2 million. The impairment charge wasrecognised in profit and loss under 'impairment of goodwill'.
| Machines and | other | total | total | ||
|---|---|---|---|---|---|
| in thousands of euros | installations | assets | 2008 | 2007 | |
| Costs 1 January | - | 5.512 | 5.512 | 6.274 | |
| Accumulated depreciation | |||||
| 1 January | - | -5.200 | -5.200 | -5.701 | |
| Book value as at 1 January | - | 312 | 312 | 573 | |
| Changes: | |||||
| Investments | - | 117 | 117 | 160 | |
| Disposals | - | -75 | -75 | -922 | |
| Depreciation | - | -166 | -166 | -260 | |
| Depreciation on disposals | - | -13 | -13 | 776 | |
| Translation differences | - | - | - | -15 | |
| Other movements | - | - | - | - | |
| - | -137 | -137 | -261 | ||
| Costs 31 December | - | 5.554 | 5.554 | 5.512 | |
| Accumulated depreciation | |||||
| 31 December | - | -5.379 | -5.379 | -5.200 | |
| Book value as at 31 December | - | 175 | 175 | 312 | |
11
The following depreciation percentages are used:
| % | ||
|---|---|---|
| Machines and installations | 10-20 | |
| Refurbishing | 10-12 | |
| Computer equipment and programmes | 33 | |
| Other assets | 33 | |
| Other investments Other investments wholly relates to financial assets. Movements were as follows: | ||
| in thousands of euros | 2008 | 2007 |
| Book value as at 1 January | 45 | 90 |
| Changes: | ||
| Redemption on loans granted | -30 | -45 |
| -30 | -45 | |
| Book value as at 31 December | 15 | 45 |
In October 2003, the company issued a loan of € 90,000 to Secundo B.V., the holding company of CMedia Productions B.V. The loan is subordinated to all Secundo's obligations to its bank. The interest on this loan on an annual basis is 6% and the loan had to be repaid in two equal instalments, on 1 October 2007 and 1 October 2008. By the end of 2008 € 75,000 had been collected. Renegotiations with Secundo B.V. have resulted in postponed repayment of the last € 15,000 until January 2009. The carrying amount as per 31 December 2008 is hence € 15,000 (2007: € 45,000).
| assets | net | net | |||
|---|---|---|---|---|---|
| 2007 | |||||
| - | - | -154 | -661 | -154 | -661 |
| 154 | 661 | - | - | 154 | 661 |
| 154 | 661 | -154 | -661 | - | - |
| -154 | -661 | 154 | 661 | - | - |
| - | - | - | - | - | - |
| 2008 | 2007 | 2008 | assets liabilities liabilities 2007 |
2008 |
Deferred tax assets have not been recognised in respect of the following items:
| Unrecognised deferred tax assets | |||
|---|---|---|---|
| in thousands of euros | 2008 | 2007 | |
| Tax Losses | 5.417 | 4.345 |
The tax losses expire in the period from 2011 through 2017. Deferred tax assets have only been recognised to the level of deferred tax liabilities which are available to offset the deferred tax assets within the same fiscal unit for corporate income tax purposes. The amount of deferred tax assets that exist in excess of these deferred tax liabilities has not been recognised for the time being, as management is insufficiently certain that taxable profit will be available in the near future against which the temporary difference can be utilised.
| in thousands of euros | 01-01-2008 | recognised in income |
recognised in equity |
balance 31-12-2008 |
|
|---|---|---|---|---|---|
| Intangible assets | -661 | 507 | - | -154 | |
| Tax value of loss carry | |||||
| foreward utilised | 661 | -507 | - | 154 | |
| - | - | - | - | ||
| in thousands of euros | 01-01-2007 | recognised in income |
recognised in equity |
balance 31-12-2007 |
|
| Intangible assets Interest-bearing loans |
-980 | 319 | - | -661 | |
| and borrowings | -17 | 17 | - | - | |
| Tax value of loss carry | |||||
| foreward utilised | 997 | -336 | - | 661 | |
| - | - | - | - | ||
| Inventories | |||||
| in thousands of euros | 31-12-2008 | 31-12-2007 | |||
| Trade goods | 7 | 21 | |||
| 7 | 21 |
The valuation of inventories on the basis of net realisable value is not materially different from the valuation above.
Blue Fox only sells software licences and related services. Any hardware that is sold, belongs to third parties for which Blue Fox holds no inventories. Inventories mentioned in this table relate to the small hardware devices through which our software can be distributed.
| in thousands of euros | 31-12-2008 | 31-12-2007 |
|---|---|---|
| Work in progress | 131 | 171 |
| 131 | 171 |
The valuation of work in progress includes losses and possible future losses, as far as these can be foreseen as at balance sheet date. The stage of completion of contracts has been determined based on hours worked and realised production.
| in thousands of euros | 31-12-2008 | 31-12-2007 | |
|---|---|---|---|
| Trade receivables | 3.582 | 6.278 | |
| Amounts to be invoiced | - | 40 | |
| Prepaid expenses | 543 | 488 | |
| Other receivables and accrued income | 247 | 531 | |
| 4.372 | 7.337 |
16
| in thousands of euros | gross trade debtors 31-12-2008 |
impairment 31-12-2008 |
net trade debtors 31-12-2008 |
gross trade debtors 31-12-2007 |
impairment 31-12-2007 |
net trade debtors 31-12-2007 |
|---|---|---|---|---|---|---|
| Number of days outstanding* |
||||||
| 0 - 30 days | 1.770 | - | 1.770 | 4.582 | - | 4.582 |
| 31 - 60 days | 165 | - | 165 | 446 | - | 446 |
| 61 - 90 days | 344 | - | 344 | 288 | -9 | 279 |
| > 90 days | 1.583 | -280 | 1.303 | 1.491 | -520 | 971 |
| Total | 3.862 | -280 | 3.582 | 6.807 | -529 | 6.278 |
* The company uses a payment term of 30 days.
| in thousands of euros | 2008 | 2007 | |
|---|---|---|---|
| Balance at 1 January | 529 | 830 | |
| Impairment loss recognised | 40 | -102 | |
| Disposal of participations | -289 | -199 | |
| Balance at 31 December | 280 | 529 | |
| Cash and cash equivalents | |||
| in thousands of euros | 31-12-2008 | 31-12-2007 | |
| Bank balances | 1.718 | 1.053 | |
| Cash and cash equivalents | 2 | 6 | |
| 1.720 | 1.059 |
| unallocated | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| trans- | accu- | current | |||||||
| share | share | legal | lation | mulated | year's | minority | total | ||
| in thousands of euros | capital premium | reserves | reserves | deficit | result | total | interest | equity | |
| Balance as at 31 December 2006 | 7.024 | 22.128 | 8.060 | -52 -27.380 | -6.560 | 3.220 | 48 | 3.268 | |
| Issue of new shares | 1.843 | 581 | 2.424 | 2.424 | |||||
| Other movements | -11 | -11 | -13 | -24 | |||||
| Appropriation of result | -6.560 | 6.560 | - | - | |||||
| Exchange rate differences participating interests | 48 | 48 | 48 | ||||||
| Transfer from other reserves | -1.360 | 1.360 | - | - | |||||
| Result financial year | 4.616 | 4.616 | -17 | 4.599 | |||||
| Balance as at 31 December 2007 | 8.867 | 22.709 | 6.700 | -4 -32.591 | 4.616 | 10.297 | 18 | 10.315 | |
| Issue of new shares | - | - | |||||||
| Other movements | - | -23 | -23 | ||||||
| Appropriation of result | 4.616 | -4.616 | - | - | |||||
| Exchange rate differences participating interests | -67 | -67 | -67 | ||||||
| Transfer from other reserves | -3.201 | 3.201 | - | - | |||||
| Result financial year | -6.182 | -6.182 | 5 | -6.177 | |||||
| Balance as at 31 December 2008 | 8.867 | 22.709 | 3.499 | -71 -24.774 | -6.182 | 4.048 | - | 4.048 |
Share capital and share premium At 31 December 2008, the issued share capital comprised 4,433,702 ordinary shares (2007: 4,433,702) with nominal value € 2.00, which have been fully paid up.
Legal reserves In conformity with the Netherlands Civil Code, a legal reserve is recognised for the carrying amount of capitalised software development costs at balance sheet date.
Translation reserves The translation reserve comprises all foreign exchange differences arising from the translation of the financial statements of foreign operations that are not integral to the operations of the company, as well as –for as far applicable - from the translation of liabilities that hedge the company's net investment in a foreign subsidiary.
Earnings per share The calculation of earnings per share at 31 December 2008 was based on the result attributable to ordinary shareholders of € 6,182,000 negative (2007: € 4,616,000 positive) and a weighted average number of ordinary shares outstanding during the year ended 31 December 2008 of 4,433,702 (2007: 3,972,911), calculated as follows: 18
| number of shares | 31-12-2008 | 31-12-2007 |
|---|---|---|
| Issued ordinary shares at 1 January | 4.433.702 | 3.512.120 |
| New shares issued (June 2007) | - | 921.582 |
| Issued ordinary shares at 31 December | 4.433.702 | 4.433.702 |
| Issued ordinary shares at 1 January | 4.433.702 | 3.512.120 |
| Effect of issued shares at 31 December | - | 460.791 |
| Weighted average number of ordinary shares | 4.433.702 | 3.972.911 |
| Profit for the period | -6.182 | 4.616 |
| Expense recognised in the income statement | -6.182 | 4.616 |
| Earnings per share | - € 1,39 | € 1,16 |
Diluted earnings per share In 2008, instruments that could potentially dilute earnings per share in the future were not included in the calculation of diluted earnings per share, because they were not dilutive for the period presented. 19
The diluted weighted average number of ordinary shares can be calculated as follows:
| Weighted average number of ordinary shares (diluted) | |||
|---|---|---|---|
| in thousands of euros | 31-12-2008 | 31-12-2007 | |
| Weighted average number of ordinary shares at 31 December | 4.433.702 | 3.972.911 | |
| Effect of conversion of convertible notes | 2.897.652 | - | |
| Effect of share options on issue | 4.930 | 21.620 | |
| Weighted average number of ordinary shares (diluted) | |||
| at 31 December | 7.336.284 | 3.994.531 | |
| Profit attributable to ordinairy shareholders (diluted) | |||
| in thousands of euros | 31-12-2008 | 31-12-2007 | |
| Profit attributable to ordinary shareholders | -6.182 | 4.616 | |
| After-tax effect of interest on convertible loans | 14 | - | |
| Profit attributable to ordinary shareholders | -6.168 | 4.616 |
20 Interest-bearing loans and borrowings This note provides information about the contractual terms of the Group's interest-bearing loans and borrowings. For more information about the Group's exposure to interest rate and foreign currency risk, see notes on interest risk and foreign currency risk.
| Interest-bearing loans and borrowings | ||
|---|---|---|
| in thousands of euros | 31-12-2008 | 31-12-2007 |
| Non-current liabilities | ||
| Secured loans | 2.100 | 1.500 |
| 2.100 | 1.500 | |
| Current liabilities | ||
| Convertible notes | 850 | - |
| 850 | - | |
| Convertible notes | ||
| Nominal value | 850 | - |
| Carrying amount of liability as at 31 December | 850 | - |
Terms and debt repayment schedule Full repayment of the € 1,5 million loan in 2007 with 10% interest was due at 30 June 2009. Thisloan has been securitised with a lien on the shares, receivables and intellectual property rights of Blue Fox NedGraphics B.V. and IPR B.V.
In June 2008 an additional loan of € 600,000 was obtained from the same financer and under the same conditions and securities. This loan was to be repaid on 31 January 2009.
In the light of the reinforcement of Blue Fox' capital structure, repayment of both loans has been postponed until December 2010.
At the end of December 2008 a convertible loan was issued in view of the new share issue that was planned for early 2009. The convertible loan had a nominal value of € 850,000.-, the shares will have a nominal value of € 0.10 and conversion is mandatory for a price of € 0.30. The entire loan has been paid up by our main shareholders.
| in thousands of euros | 31-12-2008 | 31-12-2007 |
|---|---|---|
| Present value of defined benefit obligations | - | 564 |
| Liability for long service benefits | 72 | 66 |
| 72 | 630 |
Liability for employee benefits Under Italian law, employees of the Italian subsidiary are entitled to a termination payment when they leave the company. This termination payment amounts to approximately one month's salary per year of service. The present value of the defined benefit obligations was calculated using a discount rate of 4.3% and taking into account actuarial assumptions with respect to the average remaining service period and future salary developments. With the sale of the Porini activities, no such liability currently exists anymore at 31 December 2008.
| in thousands of euros | 31-12-2008 | 31-12-2007 | |
|---|---|---|---|
| Net liability for employee benefits at 1 January | 630 | 756 | |
| Disposal of subsidiaries | -564 | -252 | |
| Expense recognised in the income statement | 6 | 126 | |
| Net liability for employee benefits at 31 December | 72 | 630 |
| total | total | ||
|---|---|---|---|
| in thousands of euros | other | 2008 | 2007 |
| Balance at 1 January | 124 | 124 | 1.326 |
| Provisions made during the year | - | - | 140 |
| Provisions used during the year | - | - | -1.149 |
| Provisions reversed during the year | -124 | -124 | -193 |
| Balance at 31 December | - | - | 124 |
| Of which is current | - | - | 124 |
Other In 2008 only one provision remained on the balance sheet, which was for settlement of a potential legal claim. In June 2008 this provision could be released without having been used as management estimates there is no longer any chance this claim will materialise.
| in thousands of euros | 31-12-2008 | 31-12-2007 |
|---|---|---|
| Trade creditors | 1.093 | 1.371 |
| Tax and social security charges | 254 | 452 |
| Accrued staff expenses | 587 | 1032 |
| Accrued sales expenses | 3 | 86 |
| Other debts and accruals | 791 | 837 |
| 2.728 | 3.778 |
All short-term debts have a term of less than one year.
| Book | Contractual | |||||
|---|---|---|---|---|---|---|
| in thousands of euros | value | amounts | < 6 months | 6-12 months | 1-2 year | > 2 years |
| 31-12-2008 | ||||||
| Secured loans | 2.100 | 2.100 | - | - | 2.100 | - |
| Convertible loans | 850 | 850 | 850 | - | - | - |
| Bank overdrafts | - | - | - | - | - | - |
| Deferred income | 4.722 | 4.722 | 2.361 | 2.361 | - | - |
| Trade and other | ||||||
| payables | 2.728 | 2.728 | 2.728 | - | - | - |
| 10.400 | 10.400 | 5.939 | 2.361 | 2.100 | - | |
| 31-12-2007 | ||||||
| Secured loans | 1.500 | 1.500 | - | - | 1.500 | - |
| Convertible loans | - | - | - | - | - | - |
| Bank overdrafts | 607 | 607 | 607 | - | - | - |
| Deferred income | 4.685 | 4.685 | 2.342 | 2.343 | - | - |
| Trade and other | ||||||
| payables | 3.778 | 3.778 | 3.778 | - | - | - |
| 10.570 | 10.570 | 6.727 | 2.343 | 1.500 | - |
Off-balance sheet commitments As at 31 December 2008, bank guarantees were issued to third parties to an amount of € 0.1 million (year-end 2007: € 0.1 million). 25
| 31-12-2008 | 31-12-2007 | |||
|---|---|---|---|---|
| 1.056 | 1.190 | |||
| 2.268 | 2.499 | |||
| - | 135 | |||
| 3.324 | 3.824 | |||
Operating leases Non-cancellable operating lease rentals are payable as follows:
Financial instruments Exposure to credit, interest rate and currency risks arises in the normal course of the Group's business. 26
Off balance sheet commitments
Credit risk Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Credit evaluations are performed or advanced down payments are requested on all customers requiring credit over a certain amount. The Group does not require collateral in respect of financial assets.
Bank guarantees 121 126
At the balance sheet date there were no significant concentrations of credit risk. The maximum exposure to credit risk is represented by the carrying amount of each financial asset.
Interest rate risk Interest-bearing loans and borrowings have a fixed interest rate. The Group has not entered into interest rate swaps to mitigate the risk of interest rate fluctuations.
Foreign currency risk The Group is exposed to foreign currency risk on sales and purchases that are denominated in a currency other than the euro. The currencies giving rise to this risk are primarily U.S. Dollars.
In respect of other monetary assets and liabilities held in currencies other than the euro, the Group ensures that the net exposure is kept to an acceptable level, by buying or selling foreign currencies at spot rates where necessary to address short-term imbalances.
Forecasted transactions The Group has not entered into forward exchange contracts hedging forecasted transactions.
Capital management The company's primary objective when managing capital is to safeguard the company's ability to continue as going concern. In the light of the just finalised turnaround process and the appointment of new management from 1 January 2009, the company does not have an explicit return on capital policy. There have been no changes in the capital management policies during the year. Under capital, the company regards equity as shown in the balance sheet.
The company monitors capital on the basis of cash flow prognoses and the solvency and liquidity ratio. The solvency ratio is calculated as total equity attributable to equity holders of the parent divided by the balance sheet total. The liquidity ratio is calculated as current assets divided by current liabilities excluding deferred income. During the year, the solvency ratio decreased from 47.6% to 33.7%. This is due to the decrease in equity as a result of the Porini sale on the one hand and the additional loan of € 0.6 million on the other hand.
Fair values The fair values of financial instruments are not materially different from the carrying amounts shown in the balance sheet. 27
| Carrying values | 31-12-2007 | |
|---|---|---|
| in thousands of euros | 31-12-2008 | |
| Other investments | 15 | 45 |
| Trade and other receivables | 4.372 | 7.337 |
| Cash and cash equivalents | 1.720 | 1.059 |
| Interest-bearing loans and borrowings (non-current) | -2.100 | -1.500 |
| Bank overdraft | - | -607 |
| Interest-bearing loans and borrowings (current) | -850 | - |
| Trade and other payables | -2.728 | -3.778 |
The investments in tangible and intangible fixed assets amounted to € 0.1 million (2007: € 0.2 million) and € 1.7 million (2007: € 3.1 million), respectively. The investments in intangible fixed assets relate to in-house developed software.
Cash flow from financing activities The cash flow from financing activities amounted to € 1.5 million (2007: € -0.2 million). 30
| in thousands of euros | notes | 31-12-2008 | 31-12-2007 | |
|---|---|---|---|---|
| Fixed assets | ||||
| Intangible fixed assets | [33] | 4.113 | 5.513 | |
| Tangible fixed assets | [34] | 9 | 17 | |
| Financial fixed assets | [35] | 4.455 | 7.152 | |
| Total fixed assets | 8.577 | 12.682 | ||
| Current assets | ||||
| Other receivables | [36] | 4.865 | 4.882 | |
| Cash and cash equivalents | 71 | 311 | ||
| Total current assets | 4.936 | 5.193 | ||
| Current liabilities, accruals and deferred income | [37] | -2.323 | -2.202 | |
| Current assets less current liabilities | 2.613 | 2.991 | ||
| Assets less current liabilities | 11.190 | 15.673 | ||
| Long-term liabilities | [38] | -2.100 | -1.500 | |
| Provisions | [39] | -5.042 | -3.876 | |
| Shareholders' equity | 4.048 | 10.297 | ||
| Issued capital | 8.867 | 8.867 | ||
| Share premium reserve | 22.709 | 22.709 | ||
| Legal reserve | 3.499 | 6.700 | ||
| Translation reserve | -71 | -4 | ||
| Other reserves | -24.774 | -32.591 | ||
| Undistributed current year's result | -6.182 | 4.616 | ||
| Shareholders' equity | [40] | 4.048 | 10.297 |
| Net result | -6.182 | 4.616 |
|---|---|---|
| Result from participating interests | 172 | 2.793 |
| Company result | -6.354 | 1.823 |
| in thousands of euros | 2008 | 2007 |
The share in the result of participating interests consists of the share of Blue Fox Enterprises N.V. in the result of these participating interests. Results on transactions, where the transfer of assets and liabilities between Blue Fox Enterprises N.V. and its participating interests and mutually between participating interests themselves, are not incorporated insofar as they can be deemed to be unrealised.
| Costs 1 January Accumulated amortization |
20.579 | 2.265 | 22.844 | 22.990 |
|---|---|---|---|---|
| 1 January | -15.800 | -1.531 | -17.331 | -17.154 |
| Book value as at 1 January | 4.779 | 734 | 5.513 | 5.836 |
| Changes: | ||||
| Disposals | - | - | - | -146 |
| Amortization and impairment | -1.200 | -200 | -1.400 | -200 |
| Amortization on disposals | - | - | - | 23 |
| -1.200 | -200 | -1.400 | -323 | |
| Costs 31 December Accumulated amortization |
20.579 | 2.265 | 22.844 | 22.844 |
| 31 December | -17.000 | -1.731 | -18.731 | -17.331 |
| Book value as at 31 December | 3.579 | 534 | 4.113 | 5.513 |
The cost of software development include an amount of € 2.0 million (market value on acquisition date), relating to the software obtained by the acquisition of NedGraphics. Contrary to in-house developed software, which is depreciated in five years, this third-party obtained software is depreciated in ten years. Carrying amount of this software is € 0.5 million.
Impairment test for goodwill Intangible assets comprise software on the one hand and goodwill on the NedGraphics division on the other hand. In both respects, the NedGraphics division is the lowest cash generating unit. The recoverable amount of cash-generating units is based on a value-in-use calculation. This calculation is based on the budget for 2009. Cash flows for further periods are extrapolated using a 2% growth rate. A pre-tax discount rate of 13.6% has been used in discounting the projected cash flows, which corresponds with a post-tax discount rate of 12.1%. Effects of tax assets and allocation of holding expenses have been taken into account too. Key assumption in the 2009 budget is that revenue will return to around 2007 level, and, if not, that sufficient cost savings can be achieved compared to the budget 2009, so that the effect of lower revenue will be offset. Any adverse change in this assumption would result in an increase in the impairment charge recorded in 2008.
Based on the impairment test the recoverable amount of this cash-generating unit islower than the carrying amount. As a result, the goodwill on NedGraphics was impaired for an amount of € 1.2 million. The impairment charge has been recognised in profit and loss under 'impairment of goodwill'.
| in thousands of euros | 2008 | 2007 | |
|---|---|---|---|
| Costs 1 January | 672 | 665 | |
| Accumulated depreciation 1 January | -655 | -617 | |
| Book value as at 1 January | 17 | 48 | |
| Changes: | |||
| Investments | 1 | 7 | |
| Disposals | - | - | |
| Depreciation | -9 | -38 | |
| -8 | -31 | ||
| Costs 31 December | 673 | 672 | |
| Accumulated depreciation 31 December | -664 | -655 | |
| Book value as at 31 December | 9 | 17 | |
| The following amortisation/depreciation percentages are used: |
Refurbishing 12 Fixtures and fittings 20 Computer equipment 33 Other assets 33
%
Amortisation/depreciation percentages
| in thousands of euros | 31-12-2008 | 31-12-2007 | |
|---|---|---|---|
| Participations in group companies | 4.440 | 7.107 | |
| Granted loans to third party's | 15 | 45 | |
| 4.455 | 7.152 | ||
| Movements in participations: | |||
| Net asset value as at 1 January | 7.107 | 8.929 | |
| Capital injections | 10 | 652 | |
| Sale/divestment of group companies | -3.147 | -4.022 | |
| Dividend received | -797 | -3.808 | |
| Result from participations | 172 | 2.793 | |
| Exchange rate differences | -71 | -1 | |
| Change in provisions for negative net asset value | 1.166 | 2.564 | |
| Net asset value as at 31 December | 4.440 | 7.107 |
In October 2003, the company issued a loan of € 90,000 to Secundo B.V., the holding company of CMedia Productions B.V. The loan is subordinated to all of Secundo's obligations to its bank. The interest on this loan on an annual basis is 6% and the loan had to be repaid in two equal instalments, on 1 October 2007 and 1 October 2008. Renegotiations with Secundo management resulted in a repayment of € 30,000 in 2008 and the last instalment of € 15,000 payable in January 2009. Hence, the carrying amount as per 31 December 2008 is € 15,000 (2007: € 45,000).
| in thousands of euros | 31-12-2008 | 31-12-2007 | |
|---|---|---|---|
| Receivables from group companies | 4.470 | 3.299 | |
| Deferred taxation | 134 | 1.250 | |
| Other accounts receivable, prepayments and accrued income | 261 | 333 | |
| 4.865 | 4.882 |
The deferred tax asset of € 134,000 (2007: € 1,250,000) is based on the tax loss carry-forward facilities for the fiscal unit for corporate income taxes (in the Netherlands). This deferred tax asset is offset by deferred tax liabilities recognised for other companies within the fiscal unit for corporate income taxes. No deferred tax asset has been recognised for the fiscal unit as a whole as management is currently insufficiently certain that sufficient future profit will be made to realise the value of the tax assets.
| in thousands of euros | 31-12-2008 | 31-12-2007 |
|---|---|---|
| Convertible loan | 850 | - |
| Trade creditors | 300 | 629 |
| Debts to group companies | 595 | 1.278 |
| Taxation and social security charges | 18 | 10 |
| Other debts, accruals and deferred income | 560 | 285 |
| 2.323 | 2.202 |
All short-term debts have a term of less than one year.
As at 31 December 2008, the company had no current account credit facilities (2007: none).
| in thousands of euros | 31-12-2008 | 31-12-2007 |
|---|---|---|
| Secured loans | 2.100 | 1.500 |
| 2.100 | 1.500 | |
| For more details on this matter we kindly refer to note 20 of the consolidated balance sheet. |
| in thousands of euros | 31-12-2008 | 31-12-2007 |
|---|---|---|
| Provision for negative equity group companies | 5.042 | 3.876 |
| 5.042 | 3.876 |
Shareholders' equity Movements of the shareholders' equity can be stated as follows: 40
| Shareholders' equity capital and reserves | unallocated | ||||||
|---|---|---|---|---|---|---|---|
| in thousands of euros | share | share capital premium |
legal reserves |
trans- lation reserves |
accu- mulated deficit |
current year's result |
total |
| Balance as at 31 December 2006 | 7.024 | 22.128 | 8.060 | -52 -27.380 | -6.560 | 3.220 | |
| Issue of new shares | 1.843 | 581 | 2.424 | ||||
| Other movements | -11 | -11 | |||||
| Appropriation of Result | -6.560 | 6.560 | - | ||||
| Exchange rate differences | |||||||
| participating companies | 48 | 48 | |||||
| Transfer from other reserves | -1.360 | 1.360 | - | ||||
| Result financial year | 4.616 | 4.616 | |||||
| Balance as at 31 December 2007 | 8.867 | 22.709 | 6.700 | -4 -32.591 | 4.616 | 10.297 | |
| Appropriation of Result Exchange rate differences |
4.616 | -4.616 | - | ||||
| participating companies | -67 | -67 | |||||
| Transfer from other reserves | -3.201 | 3.201 | - | ||||
| Result financial year | -6.182 | -6.182 | |||||
| Balance as at 31 December 2008 | 8.867 | 22.709 | 3.499 | -71 -24.774 | -6.182 | 4.048 |
Before and during 2008 the authorised share capital consisted of 10,000,000 ordinary shares and 5,000,000 preference shares of € 2 nominal value per share, together representing an authorised share capital of € 30 million. On the extraordinary meeting of shareholders that was held on December 12th 2008, it was decided to change the authorised share capital to 20,000,000 ordinary shares and 10,000,000 preference shares of € 0.10 nominal value per share, representing an authorised share capital of € 3 million. This decision was effectuated in march 2009. On 31 December 2008 4,433,702 ordinary shares with nominal value of € 2,00 (2007: 4,433,702) were issued and paid up.
The formed legal reserve is made on account of the capitalisation of costs of in-house developed software.
The share premium reserve includes payments with regard to the issue of shares insofar as these payments exceed the nominal value of the shares (payment above par). Of the share premium reserve, at least € 11.5 million (2007: € 11.5 million) can be regarded as tax-exempt share premium in accordance with the 'Wet inkomstenbelasting 1964' (Income Tax Act 1964).
The unallocated current year's loss amounting to € 6,182,000 will be added to the accumulated deficit.
Off-balance sheet commitments The company has entered into lease agreements with the total annual costs amounting to € 6,000 (year-end 2007: € 6,000). The average remaining term of the lease agreements is 1.5 years. 41
Blue Fox heads a fiscal unity for corporate income tax purposes, to which all the Dutch wholly-owned subsidiaries at year-end 2008 belong. On this basis, the company is wholly and severally liable for the tax commitments of the fiscal unity as a whole.
Options No options were exercised, nor issued in 2008. 42
| 31-12-2008 | date granted | term | issued options |
outstanding options |
exercised/ cancelled |
exercise price (€) |
|---|---|---|---|---|---|---|
| May 2004 | 2009 | 27.400 | 4.850 | 22.550 | 6,34 | |
| Total | 27.400 | 4.850 | 22.550 | |||
| 31-12-2007 | date granted | term | issued options |
outstanding options |
exercised/ cancelled |
exercise price (€) |
| May 2003 | 2008 | 33.980 | 11.840 | 22.140 | 5,80 | |
| May 2004 | 2009 | 27.400 | 9.780 | 17.620 | 6,34 | |
| Total | 61.380 | 21.620 | 39.760 |
As per 31 December 2008, the Members (and former Members) of the Board of Directors and the Supervisory Board hold no options outstanding (2007: none).
| in euros | gross compensation * |
bonuses | pension expenses |
|||
|---|---|---|---|---|---|---|
| 2008 | 2007 | 2008 | 2007 | 2008 | 2007 | |
| Supervisory Board | ||||||
| Servaas L.M. Houtakkers 1 | 48.062 107.000 | - | - | - | - | |
| Pierre A.M. Pellenaars 2 | - | 9.500 | - | - | - | - |
| Ton Pannekoek 3 | - | 9.500 | - | - | - | - |
| Leon P.E.M. van den Boom | 18.000 | 19.000 | - | - | - | - |
| 66.062 145.000 | - | - | - | - | ||
| Board of Directors | ||||||
| Cees J.J. van Steijn 4 | 165.000 360.000 | - | 150.000 | - | - | |
| Arie J.J.P.M. van Leusden 5 | 93.750 | - | - | - | - | - |
| 258.750 360.000 | - 150.000 | - | - |
* Gross salary is exclusive of bonuses, social security charges and pension expenses.
| in thousands of euros | 2008 | 2007 |
|---|---|---|
| Audit by KPMG Netherlands | 120 | 110 |
| Audit by foreign KPMG offices | 44 | 44 |
| Audit related services | 0 | 10 |
| Tax services | 23 | 23 |
| Other services | 0 | 0 |
| Total | 187 | 187 |
Vianen, 29 April 2009
The Board of Directors P.A.J.J. Aarts H.J.J. Pullens
The Supervisory Board S.L.M. Houtakkers, Chairman L.P.E.M. van den Boom D. Lindenbergh
To the Supervisory Board and Shareholders of Blue Fox Enterprises N.V.:
Report on the financial statements We have audited the accompanying financial statements 2008 of Blue Fox Enterprises N.V., Vianen. The financial statements consist of the consolidated financial statements and the company financial statements. The consolidated financial statements comprise the consolidated balance sheet as at 31 December 2008, the consolidated income statement, the consolidated statement of recognized income and expense and the consolidated statement of cash flows for the year then ended, and a summary ofsignificant accounting policies and other explanatory notes. The company financialstatements comprise the company balance sheet as at 31 December 2008, the company profit and loss account for the year then ended and the notes.
Management's responsibility Management isresponsible for the preparation and fair presentation of the financialstatements in accordance with International Financial Reporting Standards as adopted by the European Union and with Part 9 of Book 2 of the Netherlands Civil Code, and for the preparation of the management board report in accordance with Part 9 of Book 2 of the Netherlands Civil Code. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of the financialstatementsthat are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.
Auditor's responsibility Our responsibility is to express an opinion on the financial statements based on our audit. We conducted our audit in accordance with Dutch law. This law requires that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements 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 entity'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 financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion with respect to the consolidated financial statements In our opinion, the consolidated financial statements give a true and fair view of the financial position of Blue Fox Enterprises N.V. as at 31 December 2008 and of its result and its cash flow for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union and with Part 9 of Book 2 of the Netherlands Civil Code.
Opinion with respect to the company financial statements In our opinion, the company financial statements give a true and fair view of the financial position of Blue Fox Enterprises N.V. as at 31 December 2008 and of its result for the year then ended in accordance with Part 9 of Book 2 of the Netherlands Civil Code.
Report on other legal and regulatory requirements Pursuant to the legal requirement of Section 2:393 sub 5 part f of the Netherlands Civil Code, we report, to the extent of our competence, that the management board report is consistent with the financial statements as required by Section 2:391 sub 4 of the Netherlands Civil Code.
Rotterdam, 29 April 2009 KPMG Accountants N.V. F.J. van het Kaar RA
Pursuant to article 28 of the Articles of Association, the profit is at the disposal of the Annual General Meeting of Shareholders.
The unallocated current year's result amounting to € 6,181,692 negative will be added to the accumulated deficit.
At the end of 2008 a mandatory convertible loan was issued. Conversion of this loan into shares would take place once the nominal value of the Blue Fox shares was reduced from € 2.00 to € 0.10. The reduction of the nominal value was effectuated on February 17th 2009 and the subsequent new share issue has taken place on March 5th 2009.
The following offices with operating activities are part of the Group:
| Company | Based in | business address | Managing Director(s) |
|---|---|---|---|
| Blue Fox Enterprises N.V. | the Netherlands (Vianen) |
Ir. D.S. Tuynmanweg 10 4131 PN Vianen telephone +31 347 329 755 fax +31 347 329 736 |
P.A.J.J. Aarts (1967) / H.J.J. Pullens (1972) |
| Blue Fox Enterprises B.V. | the Netherlands (Vianen) |
Ir. D.S. Tuynmanweg 10 4131 PN Vianen telephone +31 347 329 755 fax +31 347 329 736 |
P.A.J.J. Aarts (1967) / H.J.J. Pullens (1972) |
| Blue Fox IPR B.V. | the Netherlands (Vianen) |
Ir. D.S. Tuynmanweg 10 4131 PN Vianen telephone +31 347 329 755 fax +31 347 329 736 |
Blue Fox Enterprises B.V. |
| TOPCAD B.V. | the Netherlands (Vianen) |
Ir. D.S. Tuynmanweg 10 4131 PN Vianen telephone +31 347 329 755 fax +31 347 329 736 |
Blue Fox Enterprises B.V. |
| Blue Fox NedGraphics B.V. | the Netherlands (Vianen) |
Ir. D. S. Tuynmanweg 10 4131 PN Vianen telephone +31 347 329 696 fax +31 347 329 699 |
C.J. van Stam (1961) Blue Fox Enterprises B.V. |
| Blue Fox NedGraphics B.V | China (Shanghai) |
29/F Pufa Tower, Room H 588 Pudong South Road Pu Dong Xi Qu Shanghai 200120 telephone + 86 21 5840 3828 fax +86 21 5876 7655 |
C.J. van Stam (1961) Blue Fox Enterprises B.V. |
| Blue Fox MDP B.V. | the Netherlands (Vianen) |
Ir. D. S. Tuynmanweg 10 4131 PN Vianen telephone +31 347 329 755 fax +31 347 329 736 |
Blue Fox Enterprises B.V. |
| Blue Fox NedGraphics BvBa | Belgium (Deerlijk) |
Nijverheidslaan 54b 8540 Deerlijk telephone +32 56 78 28 00 fax +32 56 78 28 08 |
C.J. van Stam (1961) Blue Fox Enterprises B.V. |
| Company | Based in | business address | Managing Director(s) |
|---|---|---|---|
| Blue Fox NedGraphics of Tennessee Inc. |
USA (Chattanooga) |
6142 Shallowford Road Suite 101 Chattanooga, TN 37421 telephone +1 423 892 03 89 fax +1 423 892 15 32 |
H.J.J. Pullens (1972) M. Sherman (1968) |
| Blue Fox NedGraphics Ltd. | UK (Dukinfield) |
8 Parkin Close Cheshire, Dukinfield SK16 4DD telephone +44 161 343 84 01 fax +44 161 343 84 01 |
Blue Fox Enterprises B.V. |
| Blue Fox NedGraphics SA | France (Paris) |
79-81, Rue du Faubourg Poissonnière 75009 Paris telephone +33 1 53 26 26 26 fax +33 1 53 26 26 10 |
C.J. van Stam (1961) |
| Blue Fox NedGraphics Inc. | USA (New York) |
104 West 40th Street 12th floor New York, NY 10018 telephone +1 212 921 27 27 fax +1 212 768 44 88 |
H.J.J. Pullens (1972) M. Sherman (1968) |
| Blue Fox NedGraphics Inc. | USA (Charlotte) |
1801 Cross Beam Drive NC 28217 Charlotte telephone +1 704 357 35 80 fax +1 704 357 35 83 |
H.J.J. Pullens (1972) M. Sherman (1968) |
| Blue Fox Srl | Romania (Bucharest) |
Str. Badea Cartan nr. 15 Sector 2 020000-024500 Bucharest telephone +40 21 212 24 17 fax +40 21 212 21 74 |
Blue Fox Enterprises B.V. |
| Dynamics Perspective Inc | USA (Los Angeles) |
31416 Agoura Road Suite 150 Westlake Village (LA), CA 91361 Los Angeles telephone +1 818 887 08 40 fax +1 818 313 79 00 |
P. Jennings (1954) |
| Dynamics Perspective Inc. | USA (New York) |
104 West 40th Street 12th floor New York, NY 10018 telephone +1 212 921 27 27 fax +1 212 768 44 88 |
P. Jennings (1954) |
| Company | Based in | business address | Managing Director(s) |
|---|---|---|---|
| Blue Fox Nedgraphics Srl. | Italy | Via Trento 7 (3e piano) | C.J. van Stam (1961) |
| 22074 Lomazzo CO | |||
| telephone +39 02 96 77 81 18 | |||
| fax +39 02 96 37 94 61 |
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