Annual Report - Myriad Group

Transcription

Myriad Group AG
Annual Report 2015
Welcome
to Myriad
We build products that bring global
communities together for the betterment of
all. From embedded software platforms and
mobile operator messaging services to our
flagship social messaging app Versy, Myriad
prides itself on driving innovation, leveraging
broad industry expertise, and building
technology inspired by a world of potential.
See page 2 for more information on our products
Strategic Report
Financial Statements
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2
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10
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Highlights
Our products
Letter to shareholders Operating structure
Corporate Governance
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Corporate governance report 2015
Compensation report 2015
Report of the statutory auditor on the compensation report
Management discussion and analysis of results
Consolidated financial statements
Notes to the consolidated financial statements
Report of the statutory auditor on the consolidated financial statements
Statutory financial statements
Notes to the statutory financial statements
Report of the statutory auditor on the statutory financial statements
Information for investors
Highlights
Strategic Report
Operational
• Successful Versy launch in H1 and on track with
2 product strategy announced in H2
• Versy channel followers grow to 13.9m1
• Sub Data rebranded as Myriad Connect
• 13% revenue growth in Myriad Connect revenue
• Raised CHF 34.4 million through private placement of
shares
• Closed significant new Microsoft contracts in
Device Solution
1 includes users that follow multiple channels
Financial
USD 37.8m +64%
Cash and cash equivalents
(2014: USD 23.1m)
USD (13.1m)
Adjusted EBITDA
(2014: USD 7.5m)
USD 27.3m -32%
Revenue
(2014: USD 40.2m)
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Annual Report 2015
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Our products
Creating & connecting
communities
Our vision is to be the leading social mobile
communication platform that stimulates emotional
relationships between people and brands, enriched
by engaging content and underpinned by our
Connect and Device Solutions business divisions.
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Strategic Report
Our messaging services deliver instant messaging and
social networking to tens of millions of users in Latin
America, Asia and Africa.
Following the success of Sub Data, which has shown
healthy growth over the last three years, we have
reshaped and repositioned this division, now named
Myriad Connect. This business transformation follows
the success of Myriad’s best-in-class Unstructured
Supplementary Service Data (USSD) platform that
connects mobile network operators (MNOs) with all their
end users.
Myriad Connect will take new solutions to new markets,
providing a platform for future expansion. The focus is on
providing a broader portfolio of value added services to
both MNOs and enterprises. New services such as
Campaign+ enable MNOs to promote and monetise their
value added services. Our VAS+ solution connects users to
online services without mobile internet, giving them access
to the most popular social networks and connected services
such as Facebook, Twitter, Search, Translate, Wikipedia and
Goal.com, and has demonstrated healthy growth in
emerging markets.
Myriad’s unique social platform for content discovery
and conversation, Versy, creates communities, inspires
conversations and builds new friendships out of interests.
Bringing together compelling content, Versy sparks
conversations and new friendships by building and
connecting passionate communities of like-minded people.
The market reach for Versy is expanding as we launch to
the US Hispanic community in Q2 2016. The integration of
chat, video and audio makes Versy a powerful platform at
the forefront of innovation in the world of mobile
communication.
See page 4 for more information on our products
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Annual Report 2015
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Our focus at Myriad is all about the latest technology.
We strive to be the best and deliver innovative solutions
to the market that are relevant and stand the test of time.
Myriad delivers consumer applications, social media and
messaging solutions, and embedded software to leading
OEMs, mobile operators, and pay TV providers worldwide.
Technology
inspired
Versy is Myriad’s social platform for
content discovery and conversation;
creating communities, inspiring
conversations and enabling users to
build new friendships out of interests.
Versy is a way for people, companies
and organisations to speak to the world:
to tell others what’s happening, start
conversations and listen to what
people are saying.
As one of the most engaging social media platforms in
Latin America, Versy connects Hispanic communities
around the world together in a unique, natural chat
experience, not available from any other social media
service. It has evolved to become a unique proposition
focusing on what the user is interested in, placing content
discovery and conversation centrally to the experience.
Through seamlessly combining text, audio and video,
Versy brings users relevant content, sparking discussion
and new friendships by building and connecting
passionate communities of like-minded people.
Through its constantly growing number of content
partners, it offers users compelling, and often unique,
content. With millions of channel followers, Versy
connects users in a unique, engaging way.
A powerful platform for brands and media partners,
Versy enables them to reach an audience they have never
seen before.
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Device Solutions
Although smartphone penetration and
3G/4G coverage is increasing, the cost
of data access is still beyond most
people’s reach in emerging markets. The
Myriad Connect Division is working
closely with Mobile Network Operators
(MNOs) worldwide to provide ‘no data
access users’ innovative and compelling
services, while understanding that it is
key for our customers to leverage high
feature-phone penetration and monetise
low average revenue per user segments.
Myriad’s unrivalled product portfolio of
device software solutions delivers
superior performance and seamless
user experiences on mobile and
embedded devices.
We have worked with Orange in more than 10 countries
across Africa to deploy the successful Orange Money
project. We also help MNOs promote and monetise their
VAS by making subscribers feel unique; sending the right
message, at the right time, through the right channels.
These solutions have been deployed with over 100
network operators and 25 OEMs worldwide. Over 2.5
billion devices are powered by Myriad technology.
Shipped on billions of devices, our Java and Android
application runtimes allow device manufacturers and
OEMs to achieve outstanding application performance
even on low-end, low-cost devices. Our content
distribution solutions enable seamless user experiences
within a multi-device, multi-screen home environment.
Service providers and device manufacturers choose
Myriad solutions to offer differentiation on their devices
by getting best-in-class application performance and
experience, while keeping costs controlled.
As an established world leader in the delivery of smart
USSD services, Myriad has more than 10 billion selfservice interactions which are processed annually on
Myriad’s hosted platforms.
Myriad Connect also connects users to online services
without mobile internet access, including the most
popular social networks and connected services, such as
Facebook, Twitter, Search, Translate, Wikipedia and
Goal.com.
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Annual Report 2015
Myriad Connect
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Letter to shareholders
Positioning for
future growth
2015 has seen some significant
changes for the business as it
positions itself for growth
opportunities.
Dear shareholders
2015 was a critical transition year for our business. With the
repositioning of Versy towards a more content-driven social
experience, we believe Myriad is better placed to seize
emerging growth opportunities in the rapidly developing
social media market. We have also taken measures to
maximise the value from existing technologies within our
Myriad Connect Division (formerly the Sub Data Division)
and Device Solutions Division (DSD). The combination of
mature technology and investment in new growth
opportunities in very attractive markets provides our
Company with the scope to participate across many of the
current and emerging stages of social media and mobile
services.
In June the msngr product was successfully repositioned to
reflect the product’s move towards a content-driven social
experience and was launched as Versy. Our experience in
the market crystallised our belief that user growth and
sustained user engagement required more than just chat
capabilities in the application. An ecosystem of interesting
and engaging content, along with the ability to share and
converse about that content, creates an attractive
destination for both users and advertisers. The remainder of
the year was focused on driving user engagement and
continuing to develop an innovative content ecosystem.
In October we announced a two-product strategy to go live
in March 2016, featuring a flagship Versy product targeted
solely at smartphone users, and a renaming of the original
Versy into Versy Lite, which will keep providing an enhanced
experience for feature phone users. This was driven by the
increasingly rapid transition to smartphone use in our key
markets, and the recognition that an application focused on
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the full range of technical capabilities of smartphone
technologies would take the product and the Versy
ecosystem even further. By addressing both aspects of the
market, Versy and Versy Lite can reach the full complement
of mobile phone users and provide Versy Lite feature phone
users a smooth migration to Versy on smartphones.
Our priority for this coming year will be to expand the rich
Versy content ecosystem, centered on Latin America and
the Hispanic community in the United States, with the focus
on driving user growth and engagement. As the Versy user
base grows and we continue to cultivate an engaged user
base, we intend to pilot monetisation opportunities.
The Myriad Sub Data Division has now returned three
consecutive years of revenue growth. It has been rebranded
Myriad Connect and with planned investments in new
additions to the product portfolio that will address mobile
network operators, content partners and financial services
organisations in developing world markets, we believe it is
now poised for further growth in 2016.
The Device Solutions Division has suffered reduced
revenues impacted by an accelerated transition from
feature to low-cost smartphones reducing the demand for
our mobile browser technology, and the increased adoption
of the RDK-2 standard in the pay TV market, which does not
require the use of our JBed Java Virtual Machine (JVM). In
the coming year, we will focus on optimising income from
these technologies.
The financial performance for the year reflects the
transitional state of the business. Consolidated Group
revenue in FY 2015 was USD 27.3m down 32% from FY 2014
(USD 40.2m), impacted by a decline of USD 6.7m in the
Device Solutions Division and USD 7.7m following the
completion of the planned sunsetting of Legacy messaging
services. In addition, Myriad has reported a net loss of USD
67.9m, which is predominantly caused by impairment
charges of USD 47.5m, including USD 45.6m relating to
goodwill and intangible assets acquired with Synchronica in
2012. Also impacting profitability was the continued
planned investment in Versy of USD 11.8m in FY 2015, and
non-cash share option costs of USD 4.8m.
These unique, content-driven experiences have fuelled
follower growth in the Versy channels. At the end of
December 2015, Versy channels had 13.9m followers across
all channels, up 34% from 10.4m at the end of September
2015.1
This momentum is critical as Versy enters 2016 and rolls out
its two-product strategy that was previously announced in
October of 2015. Since launching the msngr platform in
June 2014, Myriad built a smartphone audience over the top
of its historic mobile operator base. As the speed of
transition from feature phone to smartphone increases in
Latin America, Myriad recognised the need to have a
stronger smartphone focus with a next major release of
Versy in March 2016.
Myriad Connect Division (formally Sub Data)
The Myriad Connect Division delivered solid revenue growth
with USD 13.6m in FY 2015, a 13% increase over FY 2014 (FY
2014 USD 12.0m). The second half of 2015 also showed
accelerating revenue growth with USD 7.5m for H2 2015, a
23% increase from H1 2015 (USD 6.1m). The Myriad Connect
Division revenue for the year was underpinned by strong
sales in traditional USSD core services, such as self-care
and operational messaging, and an expansion in Value
Added Services, such as social messaging over SMS and
1 Includes users that follow multiple channels
We have continued to expand our Value Added Services in
2015, adding Wikipedia and Translate and Search over USSD
to the existing portfolio of Facebook over USSD, Facebook
over SMS and Twitter over SMS. Myriad’s Twitter over SMS
service was launched in June by Vivo, Brazil’s largest mobile
telecom operator and the largest operator in the Telefónica
Group with over 75 million subscribers. Furthermore, Orange
Group added Facebook over USSD and SMS to their
portfolio of services in Africa. As of December 2015, our VAS
Services had achieved 43m unique visitors. Additionally,
Myriad continues to power Orange Money, the Orange
Group’s mobile payment initiative which now covers 13
countries throughout Africa. We will look to expand our
mobile money initiatives with additional partners in 2016
and beyond.
Device Solutions Division
Myriad’s Device Solutions Division faced strong headwinds
in FY 2015, despite winning some larger contracts, including
two with Microsoft to provide embedded Java technology
on newly introduced low-end feature phones and browser
technology for Windows devices, and additional revenue
from an agreement signed at the end of 2014 with Jolla Oy
for Myriad’s Alien Dalvik product on Sailfish OS-based
smartphones. Revenue equalled USD 12.9m down 34% from
the prior year (FY 2015 USD 19.6m).
Sales of the division’s Java-based technologies to cable
operators slowed considerably from previous years, based
in part on the industry’s accelerated move to the RDK-2
standard from the RDK-1 standard. RDK-1 required the use
of a Java virtual machine (JVM) and based on that and the
good technical performance of its Jbed JVM, Myriad
enjoyed strong historical royalty revenue related to sales to
set top box vendors. However, the RDK-2 standard allows for
choice of the inclusion of a JVM (which involves royalty
payments) or HTML5 (royalty-free), and this has resulted in a
number of set top box vendors choosing the alternative
HTLM5 based solution, causing a significant impact on
sales of Myriad’s Jbed product. In addition, the speed of
transition in the mobile phone market to low cost
smartphones has significantly reduced the demand for our
browser technology on feature phones.
2015 Group Financial Results in Brief
Consolidated group revenue in FY 2015 was USD 27.3m
down 32% from FY 2014 (USD 40.2m). This decrease is due
to the faster than anticipated decline in revenue from the
Device Solutions Division and the full year impact of
restructuring activity completed in 2014 with the
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The new Versy release responds to the evolving needs of
users and content partners and will include features such as
video, audio, and enhanced content discovery, making it
easier for users to find the things they love and give them a
powerful way to talk about those things with their friends
and the rest of the world. The current platform will be
repositioned as Versy Lite, and it will allow feature phone
users to continue to have access to similar content found in
the Versy flagship product. Versy Lite will run alongside the
flagship Versy and provide an enhanced experience for
these users, a broad feature phone based audience for our
content partners, and a migration path to the smartphone.
In addition, further geographical penetration was made into
key markets in the Middle East and Africa. In 2015, Myriad
made investments to strengthen its direct sales force in
these regions, as well as securing key resellers to further
expand Myriad’s reach, including Samsson (Iran, Tunisia,
and Pakistan), Quadrant (Afghanistan), and Digital Afrique
(Pan-African in over 10 countries).
Versy allows bloggers and all channel broadcasters to
engage in real-time with followers, simultaneously allowing
them to have a rich and interactive experience and channel
broadcasters and brands to receive real-time feedback on
their products, services and content.
USSD and mobile money initiatives. Myriad continued to
leverage its strong relationships with global telecom
operators like Orange Group, which is running Myriad
services with 12 of its in-country operators throughout
Africa, and the Telefónica Group, which is running Myriad
services across 8 of its in-country operators throughout
Latin America.
Strategic Report
Versy
While Versy continues to offer one-to-one and group chat,
its key value drivers are content discovery and social
discussion that create communities around that content.
Versy closed 2015 with over 287 content channels in three
languages (Spanish, Portuguese and English), up 14% from
250 at the end of September 2015. The majority of these
channels are focused on millennials in Latin America, with
free access to content featuring music, movies, news,
sports, fashion and pop culture interests. Key content
partners active throughout the year included Viacom Latin
America (MTVLa, Comedy Central, Nickelodeon and
Paramount Channel), Ministry of Sound, Warner Music, UOL,
and Perform Group (Goal.com, NBA, NFL, NHL, MLB,
NASCAR, NCAA Football and NCAA Basketball channels).
Perform Group’s addition of American sports channels in
the fall of 2015 represented a key expansion of content and
exposure in the United States marketplace. In addition, by
year end, Versy had many independent bloggers driving
discussion around topics that matter most to millennials.
curtailment of Legacy msngr active user fees from network
operators, the planned sunsetting of Legacy messaging
services with several North American mobile operators, and
the expiration of Legacy support and service contracts with
Nokia which all completed in 2014. However, the growth in
the Myriad Connect Division revenue helped to offset this
somewhat. EBITDA before non-recurring items and
restructuring costs for FY 2015 was a USD 13.1m loss,
mostly reflecting the USD 11.8m investment in the Versy
product, including rebranding, research and development of
the new Versy flagship product, increased marketing activity
and content acquisition.
EBITDA has also been impacted by increased share option
costs of USD 4.8m (FY 2014: USD 1.3m) reflecting the
non-cash expense of share options granted in 2015.
Following an increase to conditional capital approved by
shareholders at the 2015 Annual General Meeting, these
option grants were made to key members of the engineering
and management teams at an exercise price of CHF 5.00.
The option holders will not benefit unless the share price
exceeds this amount in the future, aligning their motivation
with the benefit of shareholders as a whole.
The Group has also incurred non-cash impairment charges
of USD 47.5m against intangible assets predominantly
arising out of the acquisition of Synchronica plc in 2012. The
impairment charges have arisen due to the technological
evolution of Versy during FY 2015. The Versy product has
been launched and will continue to evolve based on the
realisation that a social messaging application based
around content, rather than a pure chat application, could
build a more valuable engaged user base. To deliver and
respond to the accelerating transition to smartphones in our
target markets, Versy needed to focus more on smartphone
architecture that would be able to support the discovery of
richer content streams in video and audio. The combination
of an increased strategic focus on a smartphone-only
application and further analysis of the expected route to
monetisation, means Myriad no longer expects to
significantly monetise through the technology assets and
network operator relationships acquired with the
Synchronica transaction. These non-cash charges, together
with the increased investment in Versy, have contributed to
the Group’s net loss of USD 67.9m.
Myriad closed FY 2015 with a cash balance of USD 37.8m.
Fundraising
On 8 April 2015, Myriad announced that it had raised gross
proceeds of CHF 34.4m in a private placement of 8,600,000
shares from authorised capital. The shares were issued to
international institutional investors. The funds from the
private placement will continue to be used to accelerate
user growth and enrich the content of the Versy ecosystem.
Outlook 2016
Given the market pressures experienced in the Device
Solutions Division, we expect overall revenue to decline
in 2016 versus 2015. However, this should partly be offset
by anticipated continued growth in the Myriad Connect
Division based on new services offerings and expansion
in new markets. In addition, Versy will continue to require
significant investment focused on user growth, driving
user engagement, and the expansion of the Versy
content ecosystem.
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Changes to the Board of Directors
David Nuescheler has notified Myriad that he does not
intend to seek re-election to the Board of Directors at the
2016 Annual General Meeting. Myriad thanks
Mr. Nuescheler for his great efforts on behalf of the
Company. As part of the 2016 Annual General Meeting, the
Board has nominated David Galbraith to fill the vacancy
created by David Nuescheler’s departure.
Proposal for Opting Out
On December 15, 2015, Myriad was informed by its
shareholder Patinex AG, Freienbach, about its intention to
request to include an Opting Out clause in its articles of
incorporation in accordance with article 22 paragraph 3 of
the Swiss Stock Exchange Act at the Annual General
Meeting 2016. After such an amendment of the articles of
incorporation, a shareholder would no longer be obliged to
make a public offer to the other shareholders to acquire all
listed equity securities of the Company according to article
32 of the Swiss Stock Exchange Act when exceeding the
threshold value of 33 1/3 % of the voting rights of the
Company. The Board of Directors intends to recommend the
approval of this request at the 2016 AGM in March, because
it believes that it will have a stabilising effect on what has
been a volatile period for the Company’s stock. The past 12
months has seen Myriad stock suffer from large valuation
swings, which the Board of Directors believes is in part due
to the inherent risk in the Versy strategy that drives
speculative behaviour. Furthermore, Versy has yet to reach
monetisation and the timing of monetisation is difficult to
predict given the new version of Versy will launch in Q1 2016
and it will take some time to develop the ecosystem and
create monetisation opportunities. The Board of Directors
believes because of such factors, the market lacks
meaningful comparables, which drives further speculative
and volatile behavior. The justification by Patinex AG,
Freienbach, for the Opt-out request (as more fully discussed
in the invitation to the 2016 Annual General Meeting) states
that they intend to use the flexibility in their ownership
percentage to help stabilise the share price and discourage
short selling. The Board views this as a beneficial
counterbalance to the observed volatility in the market, and
notes that the since the announcement of the potential
Opting Out late December 2015, the Company’s stock price
has enjoyed a period of relatively low volatility.
Thank you
The Board of Directors and Senior Management team would
like to take this opportunity to thank our team members for
the commitment and contribution they have made to the
business. We would also like to thank our customers for
continuing to select Myriad as their business partner.
Finally, we would like to thank you, our shareholders, for your
continued confidence and support in Myriad Group AG.
Sincerely,
Erik Hansen Chairman Stephen Dunford
Chief Executive Officer
Strategic Report
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Annual Report 2015
Operating structure
How we operate
Myriad Group builds products that bring global communities
together for the betterment of all. Myriad operates through
three product divisions, Versy, Myriad Connect and Device
Solutions.
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Strategic Report
Versy
The latest version of Versy, due to be launched in March
2016, brings added functionality to the platform and
combines text, audio, and video, bringing an even richer
experience for users. This enhanced user experience will
continue to set Versy apart as a unique and innovative
social platform. We are making it easier for our users to
find the things they love, and give them a powerful way to
talk about them with the world and their friends.
For media brands, Versy channels represent a unique
proposition to sponsor and connect with an aspirational
millennial audience. Versy’s constantly growing number
of content partners offer users compelling, and often
unique, content. Just in one quarter, content channels
experienced double-digit growth, with an increase of over
14% from 250 in October 2015 up to 287 by January 2016.
This growth in premium content channels underscores
the unique access and value Versy provides to partners.
In Q3 2015, Versy experienced an increase in channel
followers from 10.4 million to 13.9 million1, equating to an
increase of 34%.
We continue to enter into channel arrangements with
content providers focused on taking their brand to the
Latin America market, including Ministry of Sound,
MTVLa, Comedy Central, Nickelodeon and Paramount
Channel through Viacom, and NBA, NFL, NHL, MLB,
Nascar, College Soccer and Basketball via Perform Group.
The growth in content channels underscores the unique
access and value Versy provides to partners.
As millennials become ever more blasé to advertising,
brands are seeking ways to have meaningful interaction
with their audience. Versy channel followers are more
highly engaged than on other social platforms, making
the platform a very important tool for brands wanting to
reach out to this demographic. For example, MTVLa have
0.007% interaction with their Twitter audience, yet within
their Versy channel, this rises to 5%2, providing
meaningful brand engagement.
With millions of channel followers, Versy is a powerful
platform for brands and media partners, enabling them to
reach an audience they have never seen before, and
enabling us to take our proposition to other markets
globally, starting with the US Hispanic audience, due to
launch in April 2016.
1. Includes users that follow multiple channels.
2. As of December 2015.
13.9m
Channel followers1
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Versy is Myriad’s unique social media platform for
content discovery and conversation and one of the most
engaging social messaging platforms in Latin America.
Versy not only inspires conversation, it enables
friendships to be built out of interests. Groups of likeminded users can meet, view, share and engage with
unique content covering the topics they are passionate
about. Versy users enjoy finding stories they love about
their favourite bands, movies, TV and sports stars and are
engaging by using the unique public group chat capability
of the platform to talk with others who share their
common interests.
Operating structure continued
Myriad Connect
Although smartphone penetration and 3G/4G coverage is
increasing, the cost of data access is still beyond most
people’s reach in emerging markets. Myriad Group is working
closely with Mobile Network Operators (MNOs) worldwide to
provide ‘no data access users’ innovative and compelling
services through the following 4 solutions:
USSD+ offers MNOs & B2B integrators a best-in-class
Unstructured Supplementary Service Data (USSD) platform
that provides complete market reach. Our ‘all in one’ premium
USSD platform integrates a gateway and a portal available for
both cloud-based and in-network environments. Thanks to its
scalable architecture, that relies on robust security and traffic
optimisation standards, USSD+ offers a tailored and
seamless mobile network integration with an intuitive Service
Creation Environment that allows MNOs the ability to easily
create and deploy compelling cost-saving mobile services
and boost monetisation. USSD+ is an enabler for a plethora of
connected USSD applications in several domains, such as
self-care portals, m-Health and m-Money, that reach all
mobile users while being fully LTE ready.
VAS+ connects users to online services without mobile
internet access. This challenge is addressed by our VAS+
solution that provides access to smart services with a
best-in-class user experience on any device; from basic
phones to high-end smartphones. It gives end users access
to the most popular social networks and connected services,
such as Facebook, Twitter, Search, Translate, Wikipedia and
Goal.com. VAS+ provides end user notifications in real-time,
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Annual Report 2015
triggers multi-chat sessions, updates personal information,
shares and searches content while providing MNOs the tools
to optimise traffic, manage subscriptions and implement
micro-billing routines. VAS+ is cloud-based and run by a team
of Service Growth experts assuring rapid deployment and
immediate revenue opportunities.
Campaign+ addresses the needs of MNOs to promote and
monetise their VAS by making subscribers feel unique. The
purpose of campaign management is to send the right
message, at the right time, through the right channels;
helping telecom operators maximise their conversion rates by
running optimised campaigns over USSD, SMS, SAT-Push
and IVR. Campaign+ is available both in-network or as a SaaS
and allows easy and efficient campaign creation thanks to
the simple wizard based on a sharp publication workflow. We
support MNOs in delivering best practices for their
campaigns with an intelligent auto adaptable engine capable
of geo-location detection, segmentation and subscriber
prediction. Campaign+ is open and flexible and allows 3rd
party vendors to produce rich marketing campaigns with the
integration of contextual ads. The full set of reports & stats
provide ROI through actionable insights that help optimise
and fine-tune future campaigns.
MFS+ addresses the challenge of low bank subscription rates
in emerging markets, Myriad bridges the gap between mobile
penetration and financial access. Myriad’s expertise
regarding m-Payment, m-Money and m-Banking lets end
users check their bank account, make in-store transactions,
bill payments and peer-to-peer money transfers, while
conducting micro-credit and saving operations. We have
worked with Orange in more than 10 countries across Africa
to deploy the successful Orange Money project. Additional
services will include a Mobile Wallet.
Strategic Report
Myriad Alien
Based on its long established expertise in virtual
machines and Android, Myriad developed the Alien
product; enabling Android apps to run on any traditional
Linux-based consumer electronic device. Alien hit the
market commercially at the end of 2013 with the launch
of the first Jolla smartphone. Myriad’s Alien offers device
manufacturers an alternative to Google’s Android, while
still leveraging the rich Android applications ecosystem.
(a joint venture between Comcast, Time Warner Cable and
Liberty Global). Because of its ability to operate in both US
and European based systems, RDK-2 is expected to become
a worldwide standard for next generation cable set-top
boxes, with Myriad’s Jbed product as the de-facto standard
Java Virtual Machine in those boxes.
Maintaining its global leadership in the Connected Home
space, Myriad is pushing the boundaries of the Alien
product to provide developers with an ecosystem to
create a new class of interactive applications for the TV
market. The Alien offering provides a platform that allows
for the development of applications for the TV screen,
second screen or both proving once again Myriad’s
capacity for innovation.
Myriad Connect and Share
Building on its DLNA success and United States FCC
guidelines for subscription transmissions in the home,
Myriad has developed a new multi-screen offering based
on CVP-2 for the Connect and Share product. Myriad’s
offering delivers a CVP-2 solution that allows multisystem operators (MSOs) to deliver pay TV content
securely from the home gateway to any device within the
home. Myriad was among the first companies to achieve
certification under the new CVP-2 standard.
We are currently extending our products to include
support for the most recent versions of Java™.
Myriad maintains relationships with key players in the pay
TV market including Comcast, Cisco, Pace, Arris, and
Samsung for the Myriad Jbed Advanced CDC. In 2014,
Myriad’s Jbed Java Virtual Machine was selected as a
component of the RDK-2 platform by RDK Management LLC
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Annual Report 2015
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Myriad Jbed Advanced CDC
Myriad Jbed Advanced CDC is a powerful Java™ ME
platform that enables consumer electronic device
manufacturers to build, deploy and run Java™ applications
seamlessly on any kind of communication device.
Device Solutions
Corporate governance
Myriad Group AG (the ‘Company’, together with its
subsidiaries ‘Group’, ‘Myriad’ or ‘Myriad Group’) is
committed to meeting the highest standards of corporate
governance that seek to balance transparency,
entrepreneurship and control whilst ensuring efficient
decision-making processes in view of shareholders’
interests.
This report explains how management and control of the
Company is organised and provides background
information on its corporate bodies and officers as of 31
December 2015.
Chief Technical Officer
Bruce Jackson
The following information complies with the SIX Swiss
Exchange Directive on Information Relating to Corporate
Governance (‘Directive Corporate Governance, DCG’).
Certain key elements and information are contained in the
Company’s Articles of Incorporation and Organisational
Regulations1. In cases where required information is
provided in other sections of this Annual Report,
reference is made to the appropriate page number(s).
1. Group structure and shareholders
Group structure
The organisational structure of the Group as of 31
December 2015:
Chief Financial Officer
Peter McCormack
General Counsel
Kate Criniti
Stephen Dunford
Board of Directors
Vice chairman
Mauro Saladini
Board of Directors
Chairman
Erik Hansen
1. Current versions are displayed on www.myriadgroup.com - the direct link
for the documents are mentioned in the section ‘8. Information policy’ of
this Corporate Governance Report.
14
Myriad Group AG
Annual Report 2015
Board of Directors
Board member
David Nuescheler
Non-listed companies
For a table of the operational non-listed consolidated
entities please refer to Note 32 of the consolidated
financial statements of this Annual Report.
Name of shareholder
Patinex AG, CH-Wilen1
VV Value Vals AG2
UBS Fund Management (Switzerland) AG
Grapal Holding AG3
Percentage held
25.16%
5.04%
4.68%
3.22%
1. Beneficial owners of the majority of shares in Patinex AG are Martin and
Rosmarie Ebner, 8832 Wilen, Switzerland.
2. Sole shareholder of VV Value Vals AG is Mr Remo Stoffel, Salisstrasse 23,
7000 Chur/GR, Switzerland.
3. Beneficial owner of the majority of shares in Grapal Holding AG is Hansjörg
Graf, Salisstrasse 23, 8832 Wollerau, Switzerland.
September 2015
25 September 2015, Grapal Holding AG disclosed that it
had acquired a shareholding of 3.22% in Myriad Group.
August 2015
7 August 2015, VV Value Vals AG disclosed that it had
acquired a shareholding of 5.04% in Myriad Group.
April 2015
16 April 2015, UBS Fund Management (Switzerland) AG
disclosed that it had acquired shares increasing its total
shareholding in the Company to 5.06%.
For further details on the disclosure notices please refer
to the reporting platform of SIX Swiss Exchange under:
https://www.six-exchange-regulation.com/en/home/
publications/significant-shareholders.html
Cross-shareholdings and shareholders’ agreements
Myriad Group AG has not entered into crossshareholdings with other companies.
The Company is not aware of any shareholders’ agreements.
2. Capital structure
Share capital
As of 31 December 2015, the Company has an ordinary
share capital of CHF 11,050,004.70, consisting of
110,500,047 registered shares with a nominal value of
CHF 0.10 each (110,259,391 shares registered in the
commercial register as of year-end). The conditional
capital amounts to CHF 1,078,528.30 consisting of
10,785,283 registered shares with a nominal value of CHF
0.10 each. The Company has CHF nil authorised unissued
capital at 31 December 2015.
Conditional and authorised share capital in particular
Conditional share capital
Pursuant to article 3a of the Articles of Incorporation,
dated 26 May 2014 the share capital of Myriad Group AG
may be increased through the issuance of a maximum of
10,785,283 registered shares, each fully paid-in, with a
nominal value of CHF 0.10 each, in the maximum
aggregate amount of CHF 1,078,528.30 by exercise of
option rights which are granted to the members of the
Board of Directors and employees of the Company and its
subsidiaries according to one or several employee share
option plans as approved by the Board of Directors. The
subscription rights (Bezugsrechte) of the shareholders
with respect to these shares shall be excluded.
Authorised share capital
As of 31 December 2015, the Company has CHF nil
authorised unissued capital consisting of nil shares.
28 April 2015, UBS Fund Management (Switzerland) AG
disclosed that as a result of the capital increase in April
2015, its shareholding had reduced to 4.68%.
Myriad Group AG
Annual Report 2015
15
As a summary and based on the disclosure notices
received by the Company, the following changes in
significant shareholders occurred during the financial
year 2015.
20 February 2015, UBS Fund Management (Switzerland)
AG disclosed that it had reduced its shareholding in
Myriad Group to 4.98%.
Significant shareholders
Pursuant to the information provided to the Company by
its shareholders in compliance with the Swiss Stock
Exchange Act during financial year 2015, the following
shareholders held more than 3% of the share capital as of
31 December 2015:
February 2015
3 February 2015, UBS Fund Management (Switzerland)
AG disclosed that it had acquired shares in the Company
increasing its total shareholding to 5.02%.
Strategic Report
Listed company
Myriad Group AG (formerly Esmertec AG), incorporated in
1999 as a joint-stock company, is domiciled at
Bahnhofstrasse 64, 8021 Zurich, Switzerland, care of GHR
Rechtsanwälte AG. The registered shares of the Company
are listed on the Main Standard of SIX Swiss Exchange
(Ticker symbol: MYRN; Swiss Securities Number:
1,962,480; ISIN Number: CH0019624805). The market
capitalisation amounted to CHF 283,985 million as of 31
December 2015. The Company held 20 of its own shares
as of 31 December 2015.
Corporate governance continued
2. Capital structure continued
Changes in capital
The table below sets forth the changes in share capital of
the last three reporting periods.
Ordinary share capital
Date
Capital as of 31 December 2012
September 2013
January – December 2013
September 2014
April 2015
CHF 6,113,366
CHF +3,056,683 3
CHF +26,325 2
CHF 9,196,374
CHF +940,000 1
CHF +29,565 2
CHF 10,165,939
CHF +860,000 1
CHF +24,065 2
CHF 11,050,004
Date
May 2014
April 2015
CHF 289,889
CHF – 26,325 2
CHF 263,564
CHF +288,219 5
CHF – 29,565 2
CHF 522,218
CHF +580,376 6
CHF – 24,066 2
CHF 1,078,528
Date
No changes in 2013
May 2014
September 2014
April 2015
–
–
–
CHF +1,800,000 4
CHF – 940,000 1
CHF 860,000
CHF – 860,000 1
–
1. Shares issued out of authorised capital.
2. Shares issued based on the exercise of stock options and conversion rights.
3. Creation of ordinary capital as approved by the General Meeting of
Shareholders on 15 August 2013.
4. Creation of authorised capital as approved by the General Meeting of
Shareholders on 26 May 2014.
5. Increase of conditional capital as approved by the General Meeting of
Shareholders on 26 May 2014.
6. Increase of conditional capital as approved by the General Meeting of
Shareholders on 14 April 2015.
On 8 April 2015 Myriad Group AG completed a successful
private placement of 8,600,000 shares out of the
authorised share capital, resulting in an increase of the
ordinary share capital of CHF 860,000. The net proceeds
to the Company were CHF 32,007,000.
In addition, the ordinary share capital was increased by
CHF 24,066 (240,656 registered shares) as a result of
shares issued out of conditional capital due to the
exercise of employee stock options.
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Myriad Group AG
Annual Report 2015
Shares and participation certificates
As of 31 December 2015, the ordinary share capital of
Myriad Group AG consists of 110,500,047 registered
shares with a nominal value of CHF 0.10 each, all fully
paid-in and entitled to dividend payments as determined
by the General Meeting of Shareholders. At the General
Meeting of Shareholders, each share carries one vote.
The Company has neither bearer shares, nor participation
certificates outstanding.
Profit sharing certificates
The Company does not have profit sharing certificates
outstanding.
Limitations on transferability and nominee registrations
The Company’s Articles of Incorporation do not contain
limitations on the transferability of shares.
The Company maintains a share register in which the
name, address and domicile (for legal entities the
registered office) of the owners and usufructuaries of
registered shares are recorded. The person recorded in
the share register shall be deemed to be the shareholder
or usufructuary in relation to the Company. The Company
only recognises one shareholder or usufructuary per
share.
Regarding nominee registrations, the Company applies Art.
685d para. 2 of the Swiss Code of Obligations, with the
consequence that nominees do not have voting rights.
Convertible bonds and options
As of 31 December 2015, Myriad Group AG had no
convertible bonds.
As of 31 December 2015, Myriad Group AG had
outstanding stock options granted to members of the
Board of Directors, Senior Management and employees.
For detailed information please refer to Note 10b
‘Employee compensation and benefits’ in the notes to the
consolidated financial statements. The total of
outstanding options can be exercised into 8,355,416
shares of the Company, which represents 7.6% of the
outstanding share capital.
3. Board of Directors
Members of the Board of Directors
As of 31 December 2015, the Company’s Board of
Directors consists of three non-executive members. None
of them has ever been a member of the Senior
Management of Myriad Group AG or its subsidiaries, nor
have any of them significant business connections with
Myriad Group AG or its subsidiaries.
Professional and educational background
Erik Hansen was the CEO of Day Software from May 2008
until November 2011, when the company was sold to Adobe
Inc. He has more than 30 years’ experience in the IT and
Telecommunications industries. From 2005 to 2008, he was
SVP/GM at Interwoven, and from 2004 to 2005 was SVP
EMEA at Netegrity. From 2000 to 2004 he was President
EMEA/LATAM for TIBCO Software. From 1997 to 1999 he
was EVP Worldwide Field Operations at Pyramid Technology
Inc. From 1994 to 1997 he served as CEO and President of
TA Triumph Adler. From 1990 to 1994 he held the post of
General Manager, Central Europe Mobile at Apple. Prior to
this role, Mr. Hansen held senior management posts at
Wyse Technologies and Altos Computer Systems.
Mauro Saladini started his career in 1990 as a financial
services consultant with Accenture. In 1995, he joined
Thema Consulting, where he set up the Zurich subsidiary
and took responsibility for cash flow and risk
management activities.
Other activities and vested interests
Mr. Hansen is a Non-Executive Director of Temenos AG.
David Nuescheler
Function Vice Chairman
Born/nationality – 1974, Swiss citizen
First elected – 2014
End of term – 2016
Committees – Member of the Compensation and
Nomination Committee
Mr. Saladini holds a degree in electrical engineering from
the Swiss Federal Institute of Technology Zurich as well
as an MBA from INSEAD, France.
Officer of Nagravision SA, Vice Chairman of the
Supervisory Board of SkiData AG, Executive Director of
NagraID SA, and Board member NagraID Security SA.
Permitted activities pursuant to Art. 12 para. 1 point 1
Ordinance against Excessive Compensation
According to §27 of the Articles of Incorporation, no
member of the Board of Directors may hold more than ten
additional mandates of which no more than four may be
in a listed company.
Elections and terms of office
According to §14 of the Company’s Articles of
Incorporation, dated 14 April, 2015 the Board of Directors
is composed of at least three members who shall be
elected by the General Meeting of Shareholders for a term
of office of one year.
The time period from one Annual General Meeting to the
following shall be deemed to be one year. Board members
are eligible for re-election. There are no limits on the
terms of office. In compliance with the Swiss Ordinance
against excessive compensation in Stock Exchange
Listed companies and as from the 2015 Annual General
Meeting of Shareholders, the Chairman, Board members
and members of the Compensation Committee are
annually and individually (re)-elected.
None
Myriad Group AG
Annual Report 2015
17
David Nuescheler is the VP for Enterprise Technology of
Adobe Systems. In his role, he leads product innovation and
strategy for Adobe’s Enterprise products and brings his vast
expertise in Web Experience Management to bear for Adobe’s
comprehensive enterprise solution set. David Nuescheler
drives the Adobe enterprise technology vision and
architecture and is responsible for the platform’s user
experience and technology incubation. Mr. Nuescheler joined
Adobe through its acquisition of Day Software. He cofounded Day in 1994 and was instrumental in growing the
company from a small multimedia agency to a leading
enterprise content management software company. He
created the basic concept for the original Communiqué, now
Adobe CQ5, and has guided product development to create a
truly advanced content management and infrastructure
platform. David Nuescheler has led various international
technical standardisation initiatives and is a member of the
Apache Software Foundation. Mr. Nuescheler has been
awarded for his work in standards and open source on
various occasions including being nominated twice for the
JCP Spec-Lead of the Year Award, Two Star-Spec Lead
Awards and the Lifetime Achievement Award of the “Best of
Swiss Web” Association.
In 1997, he joined McKinsey & Co, where he became a
partner in 2001. He worked in particular on corporate
finance and strategy projects relating to various
industries, mainly media and telecommunications. In
addition, Mauro Saladini was in charge of the Swiss
Media Practice and joint-head of the European Media
Practice. He has been the Chief Financial Officer and
Executive Vice President of the Kudelski Group since 1
February 2003 and is a member of the Board of Directors
of several Kudelski companies.
Mauro Saladini
Function Board member
Born/nationality – 1966, Swiss citizen
Committees – Chairman of the Audit Committee and
member of the Compensation and Nomination Committee
Strategic Report
Erik Hansen
Function Chairman
Born/nationality – 1952, Danish citizen
Committees – Chairman of the Compensation and
Nomination Committee, Member of the Audit Committee
3. Board of Directors continued
Internal organisational structure
Allocation of tasks within the Board of Directors
Based on the Company’s Articles of Incorporation and
Organisational Regulations, the Board of Directors sets
up its own organisation at its first meeting after the
General Meeting of Shareholders. It appoints a Chairman
and one or more Vice Chairmen as well as a secretary
who does not have to be a member of the Board.
The Board of Directors and the Committees meet at
regular intervals during the year, at least four times a year,
on dates agreed upon before the start of the business
year, and additionally as often as the Company’s affairs
require. During 2015, the Board of Directors usually held
meetings or telephone conferences on a monthly basis.
The Organisational Regulations stipulate that if for
reasons specific to the Company or due to circumstances
relating to the availability of the Chairman of the Board of
Directors or of the Chief Executive Officer (CEO), it should
become necessary that a single individual should assume
the joint responsibility of Chairman of the Board and CEO,
the Board of Directors can decide that both functions
shall be assumed by one and the same person and the
Chairman of the Board shall be the CEO. In this case, the
Board of Directors shall appoint an experienced nonexecutive member of the Board to act as Lead Director.
The responsibility of the Lead Director shall be to ensure
the on-going supervision and control of the CEO, the
Management by the Board of Directors and to generally
assist the Board in performing its functions and
exercising its duties and obligations.
The Lead Director shall, therefore, be entitled to convene
on his/her own and chair meetings of the Board of
Directors when necessary. He/she shall, at any time, be
entitled to request reports from the CEO and other
members of the Management. Since the Company follows
a policy of clear separation between the functions of the
Chairman of the Board of Directors and of the Chief
Executive Officer, no Lead Directors have been appointed
thus far.
Erik Hansen has been acting as Chairman of the Board of
Directors since May 2012. He has also been Chairman of
the Compensation and Nomination Committee and a
Member of the Audit Committee since then. Mauro
Saladini has been Chairman of the Audit Committee since
August 2013 and member of the Compensation and
Nomination Committee since May 2014. David
Nuescheler is a member of the Compensation and
Nomination Committee.
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Myriad Group AG
Annual Report 2015
Committees of the Board of Directors
The Board of Directors has two committees: an Audit
Committee as well as a Compensation and Nomination
Committee.
The Audit Committee (AC) shall be composed of at least
two non-executive members of the Board of Directors
who are appointed by the Board of Directors for a term of
one year. Re-election is possible. The Board of Directors
may remove and replace individual members at any time.
All members of the AC must be determined by the Board
of Directors as being fully independent and financially
literate, and at least one member must have accounting
or financial management expertise. No member of the AC
shall serve on the audit committee of more than two
other public companies. AC members shall not receive
any consulting, advisory or other compensation fees from
the Company other than for AC, Board or other Board
Committee mandates. The AC holds meetings at least
once a year prior to the Annual General Meeting of
Shareholders. In addition, the AC shall meet whenever a
meeting is requested by one of its members or as it may
deem necessary.
The AC supports the Board of Directors in exercising its
responsibilities in connection with the supervision over
the internal control system for financial reporting, in
particular with respect to matters requiring the exercise
of judgments and estimates. The AC reviews the financial
statements of the Company and discusses with the
Company’s external auditors the results of their audit of
the Company’s annual accounts. It also issues
recommendations to the Board of Directors regarding the
approval of the Company’s annual financial statements
and budget. The entire list of all duties of the AC is
available in the Organisational Regulations of the
Company (page 12) on http://www.myriadgroup.com/
investors/incorporation/. The AC generally acts in a
preparatory capacity, with decisions taken by the entire
Board of Directors.
The terms of reference and organisational structure of
the Compensation and Nomination Committee (CNC) is
detailed on page 24, within the Compensation Report.
Work methods of the Board of Directors and its Committees
In the financial year 2015, the Board of Directors and the
Committees met as follows:
• Board of Directors: 4 meetings, 3 telephone
conferences, 6 circular resolutions
• Audit Committee: 2 meetings
• Compensation and Nomination Committee: 3
meetings, 1 circular resolution.
In financial year 2015, the following meetings were
attended by members of Senior Management:
Areas of responsibility of the Board of Directors and
Senior Management
To the extent permissible by law and the Company’s
Articles of Incorporation, and unless provided otherwise
in the Organisational Regulations, the Board of Directors
has delegated the management of the Company to the
Committees and Senior Management.
In addition to the non-transferable and non-alienable legal
duties, the Company’s Board of Directors has reserved
decisions on the following issues for approval by the
Board of Directors:
• Execution of the strategy set by the Board of Directors
• Responsibility for the day-to-day management and
on-going operations of the Company
• Overall responsibility for the development and
implementation of the Company’s vision, long-term
strategies and key partnerships as well as the proposal
for key acquisitions, mergers and investments
• Preparation of proposals which have to be submitted
to the Board of Directors for approval
• Provision of regular information to the Board of
Directors about the Company’s business development
• Responsibility for implementing the risk management
and control principles as defined by the Board of Directors
Information and control instruments vis-à-vis
Senior Management
The Board of Directors ensures that it receives sufficient
information from Senior Management to perform its
supervisory duties:
• Monthly Board Reports – All Board members receive
an extensive written report on a monthly basis. This
report reflects issues of the previous month and
current developments and it includes the following
details:
– Finance Report: Key figures for the month and on a
year-to-date basis, as well as comparisons against
budget for the Group and the Divisions (e.g.
Revenue, Adjusted gross profit, OPEX, EBITDA, etc.),
Quarterly review against budget when appropriate,
Balance sheet items (e.g. Cash, Working Capital,
Cash outlook, Receivables, etc.), Cash Flow, Number
of employees, Budget update looking forward, etc.
– Commercial Report: Targets and achievements on
commercial aspects of the business for the Group
and the Divisions, information on developments in
the addressed business and markets, bookings
information, press relations updates, etc.
– Products/Operations Report: Update and forecasts
on product releases, planned events, progress in key
projects, etc.
– Update on potential M&A activities
Board members will also approve the information issued in
the framework of the Annual Report and Half-Year Report.
Usually, the Board of Directors will meet at regular intervals
and hold at least six to ten meetings per year, with
additional informal meetings or teleconferences to be held
as required between the Directors and the Chairman.
Myriad Group AG
Annual Report 2015
19
• Change of the Company’s accounting principles
(currently IFRS)
• Change of the Company’s business activities
• Issue of the Company’s internal policies (particularly
regarding insider trading, use of email and nondiscrimination, issue of employee manuals)
• Issue of Corporate Governance principles and
regulations
• Issue of risk control standards, limits and risk
principles
• Appointment and removal of members of Management
• Approval of the budget and strategy plan for each
business year
• Purchase of assets whose value exceeds USD 500,000
and whose purchase is not provided for in the budget
• Sale or agreements concerning the encumbrance of
assets by mortgage, pledge or similar restrictions in
excess of USD 500,000
• Issue of any guarantee, surety or undertaking to pay in
the name of the Company in excess of USD 500,000
• Purchase and sale of participations in other
companies, if not provided for in the budget and in
excess of USD 500,000 in the aggregate
The Senior Management has the following principal tasks:
• CEO: 6 Board meetings/telephone conferences, 1 AC
meetings/telephone conferences
• CFO: 6 Board meetings/telephone conferences, 2 AC
meetings/telephone conferences
• CTO: 6 Board meetings
• CRO: 1 Board meeting
• Formation of subsidiary companies and branch offices
in Switzerland or abroad
• Purchase or sale of real estate or parts thereof
• Any investment made, or liability or debt incurred, by
the Company, which is not provided for in the budget
and is individually in excess of USD 500,000
• Approval of option grants
Strategic Report
The average duration for the meetings has typically been
between two and four hours for Board meetings, two
hours for Audit Committee and one hour for
Compensation and Nomination Committee meetings. The
Chief Executive Officer and the Chief Financial Officer
generally attend Board meetings and, if their presence is
needed, also Committee meetings. The CEO attends the
Compensation and Nomination Committee meetings as
appropriate, and the CFO generally attends the Audit
Committee meetings. There is no regular calling by the
Board of Directors or its Committees upon external
consultants to deal with specific issues.
3. Board of Directors continued
The Chief Executive Officer and Chief Financial Officer
participate at the meetings of the Board of Directors and
report on the individual items mentioned above (for
details of the attendance see Work methods of the Board
of Directors and the Committees above). Other members
of the Senior Management attend when required. Apart
from the meetings, the CEO reports immediately any
extraordinary event and/or change within the Company or
the Group to the Chairman as appropriate. The CFO
generally attends all meetings of the Audit Committee.
At Board meetings, all members of the Board of Directors
may request information as to the general course of
business as well as to particular business matters.
Outside meetings, each Board member may request
information as to the general course of business and,
with the approval of the Chairman, as to particular
business matters.
The members of the Board of Directors may request
information from the Board of Directors as a whole, the
Compensation and Nomination Committee, the Audit
Committee, any other committee appointed by the Board
(if such exist), individual Board members, members of the
Management, and all employees of the Company who
independently carry out management duties.
To the extent necessary to fulfil its duties, each Board
member may request from the Chairman, at or outside
meetings, that books and records be disclosed to it. In the
event that the Chairman rejects a request for information
or inspection for reason of business secrecy, the Board of
Directors shall decide.
The corporate risk management function is appointed to the
Chief Financial Officer. The risk management matrix is
reviewed and approved by the Board of Directors once per
year. The organisational internal control system (ICS) is
integrated into the operating procedures accompanying
business process activity, being performed before or after
an activity. Internal controls are integrated components of
business processes; they are not summarised in a separate
ICS function. The ICS is operated on all levels within the
Myriad Group and requires a high measure of individual
responsibility of all employees. The ICS procedure:
• Focuses on key risks and key controls
• Ensures processes, risks and controls are documented
appropriately
• Maintains adequate and traceable documents
• Reports to the Audit Committee at least once a year
The ICS is applied to processes material to the financial
statements. These include:
20
Myriad Group AG
Annual Report 2015
•
•
•
•
•
•
•
Order to cash
Procure to pay
Payroll
Intangible assets
Consolidation
Information Technology
Treasury and cash management
The control matrices and process documentation for
each process within the scope of the Group’s ICS are
assessed at least annually. Controls assessments
regarding the design and operating effectiveness are
performed annually. Although the controls are listed and
assessed individually regarding their effectiveness, a
conclusion is taken by risk area. If necessary, measures
for optimising the controls are implemented.
Myriad does not employ a specific internal audit function,
but utilises regular reviews by Group and Subsidiary
Finance staff to ensure compliance with internal control
systems. In addition the External Auditor presents to the
Audit Committee an overview of issues found during the
audit of the annual financial statements as well as a
review of the internal control system. The External
Auditors were present at all Audit Committee meetings/
telephone conferences in 2015.
The Board of Directors monitors the work and audit
results of the External Auditors through the Audit
Committee. The Audit Committee reviews the selection of
auditors annually as well as the level of the external audit
fees. In its review, the Audit Committee takes into
account the External Auditor’s quality of service, the
expenses compared to other auditing companies and the
fees for non-audit related services.
4. Senior Management
As of 31 December 2015, the Senior Management
(Executive Team) of the Company consists of four
members.
Stephen Dunford
Function Chief Executive Officer
Born/nationality – 1957, UK citizen
First appointed – 2012
Stephen Dunford joined Myriad as its Chief Executive
Officer in December 2012. He has a long track record of
building value within telecommunications software and
services businesses. Prior to joining Myriad, he was CEO
of Spectrum Motion Media from 2009 to 2012. He
previously held Chairman and CEO roles at X-cell
Communications which he founded in 1990 and later sold
to Nortel Networks (in 1999). From 2003 to 2005, Mr.
Dunford was CEO of Elata, leaders in mobile content
management, which he sold to Qualcomm.
Mr. Dunford holds a Bachelor of Arts Degree in Business
Studies from Kingston University, London.
None.
Peter McCormack joined Myriad in 2010 holding a number
of senior finance positions within the company before
becoming Group Financial Controller in 2013 and Chief
Financial Officer in December 2015. Prior to Myriad, Mr.
McCormack qualified as a Chartered Accountant (ICAEW)
with accountancy and business advisory firm BDO LLP in
2006. He worked in the audit practice and managed a
portfolio of clients with a focus on the technology sector. Peter McCormack holds a Bachelor of Arts degree in
Geography from the University of Leeds.
None.
Bruce Jackson joined Myriad in June 2013 as VP
Innovation and became CTO of the company in August
2013. He has a track record of developing innovative
products and services in the telecomm, web and
connected home markets. Prior to joining Myriad, Mr.
Jackson was VP Engineering of INQ Mobile where he
designed and launched Material, the first news
aggregation service that derives interests wholly from an
individual’s social network connections. Prior to INQ, he
was VP Technology at Qualcomm for six years, and led
the team that developed Skifta, a direct-to-consumer
media streaming service for connected homes and
devices to great critical and end user acclaim. Mr.
Jackson joined Qualcomm when it acquired Elata in 2005,
where he was founder and CTO.
Kate Criniti
Function General Counsel
Born/nationality – 1970, US citizen
Kate Criniti serves as General Counsel and Corporate
Secretary. Kate joined Myriad in January 2014 and has
deep experience leading the legal and compliance
functions for both public and privately-held technology
companies. Prior to Myriad, Kate was the General Counsel
of several technology companies including ikaSystems
Corporation (2011-2014), Day Software (2010-2011), a
Swiss listed company that was acquired by Adobe
Systems in 2010, and ThingMagic (2006-2009). She has
also held senior legal positions with VeriSign, Inc.
(2004-2006)(Nasdaq:VRSN), Guardent, Inc. (2000-2004),
which was acquired by VeriSign, and IONA Technologies
(Nasdaq:IONA). Kate started her legal career as an
associate in the Business Practice Group of Testa,
Hurwitz & Thibeault, LLP in Boston, Massachusetts.
Kate holds a Juris Doctor degree from Boston College
Law School and a Bachelor of Arts degree from Bates
College.
None.
Permitted activities pursuant to Art. 12 para. 1 point 1
Ordonnance against Excessive Compensation
According to §27 of the Articles of Incorporation, no
member of the Senior Management may hold more than
six additional mandates of which no more than two may
be in a listed company.
Other than those identified above, the Senior
Management members neither pursue activities in
governing and supervisory bodies of important Swiss and
foreign organisations, institutions or foundations under
private and public law, nor do they pursue permanent
management or consultancy functions for important
Swiss and foreign interest groups. None of them have
official functions or political posts.
Personnel changes in the Senior Management
The members of Senior Management appointed in 2015
were: Peter McCormack and Kate Criniti in December
2015.
The members of Senior Management who resigned in
2015 were: Richard Francis and Olivier Bartholot in
December 2015.
Myriad Group AG
Annual Report 2015
21
Bruce Jackson
Function Chief Technology Officer
None.
Peter McCormack
Function Chief Financial Officer
Strategic Report
As CEO of Celltick Technologies (from 2006 to 2009), he
transformed the business from a licenced based
technology company into a mobile marketing managed
service business. Mr. Dunford also worked as a strategic
advisor to WDS Global (from 2006 to December 2012), a
mobile device management company, which was sold to
Xerox Corporation in August 2012. He founded Alamein, a
mobile field force application developer in 2000.
4. Senior Management continued
Management contracts
There are no management contracts delegating
management duties to third parties.
The information regarding compensation paid to and
shareholdings of the members of Myriad’s Board of
Directors and Senior Management as well as granted loans
is detailed within the Compensation Report on page 26.
5. Shareholders’ participation
Voting rights and representation restrictions
any restrictions on voting rights and representations.
Instructions to the independent proxy
According to §11 of the Articles of Incorporation, proxies
and instructions to the independent proxy can be granted
only for the next General Meeting. The Board of Directors
determines the form in which the shareholders may give
electronic proxies and instructions to the independent
proxy.
Statutory quorums
rules divergent from Swiss law.
Convocation of the General Meeting of Shareholders
The Company’s Articles of Incorporation provide for the
convocation of the General Meeting of Shareholders via
publication in the Swiss Official Gazette of Commerce no
later than 20 days before the meeting. In addition, the
invitation is sent by mail to the shareholders registered in
the Company’s share register.
Agenda
Shareholders who together hold shares with a nominal
value of at least CHF 1 million may request that an item
be put on the agenda of the General Meeting of
Shareholders. Such request shall be made in writing, at
the latest 45 days prior to the meeting, by indicating the
proposals of the petitioning shareholders.
Inscriptions into the share register
Based on a resolution of the Company’s Board of
Directors, the cut-off date for the closing of the share
register before a General Meeting of Shareholders is set
by the Board of Directors on an individual basis, whereas
the date shall be as close as possible to the scheduled
meeting date. For the General Meeting of Shareholders to
be held on 24 March 2016, the closing date for the share
register has been set for the period commencing on 11
March 2016.
22
Myriad Group AG
Annual Report 2015
6. Changes of control and defence measures
Duty to make an offer
any opting-out or opting-up provisions, meaning that a
shareholder is required to make a full tender offer if the
legally prescribed threshold of 33 1/3% of the voting
rights of the Company is reached (former Article 32 of the
Federal Act on Stock Exchanges and Securities Trading,
since 1 January 2016 Articles 135 and 163 of the Swiss
Financial Market Infrastructure Act (FinfraG)).
On December 15, 2015, Myriad was informed by its
shareholder Patinex AG, Freienbach, about its intention to
request to include an Opting Out clause in
its Articles of Incorporation in accordance with articles
135 and 163 of the Federal Act on Financial Market
Infrastructures and Market Conduct in Securities and
Derivatives Trading (FMIA).The respective request is
dated January 12, 2016. After such an amendment of the
Articles of Incorporation, acquirers of shares of the
Company are no longer obliged to make a public purchase
offer pursuant to articles 135 and 163 FMIA in case they
exceed the threshold of 33 1/3% of the voting rights of
the Company.
7. Auditors
Duration of the mandate and term of office of the lead auditor
PricewaterhouseCoopers AG, Zurich (‘PwC’) has been
acting as auditors of the Company since the financial
year 2010. The shareholders re-elected PwC as the
Company’s independent public accountants for another
term of one year at the Annual General Meeting held on 15
April 2015. Martin Kennard has been the lead auditor
since 2010.
Auditing fees
For the financial year 2015, PwC charged the Company
auditing and audit-related fees amounting to CHF 277,000
(USD 287,000).
Additional fees
PwC charged the Group the following additional fees
during the financial year 2015 for services in relation to
the following:
Tax advisory services
CHF 63,650 (USD 66,000)
Services relating to private placement CHF 27,500 (USD 28,500)
Information tools pertaining to the external audit
The Audit Committee is, on behalf of the Board of
Directors, responsible for supervising the activities
performed by the external auditors. It reviews the
engagement letter of the auditors, the fees and the terms
of the planned audit work once per year.
In the financial year 2015, PwC performed a detailed audit
report on the FY 2014 report, whose findings and
conclusions were discussed with the Audit Committee.
PwC had 2 telephone conferences with the Audit
Committee during the financial year 2015.
Any non-audit services or additional audit work to be
performed by the auditors have to be pre-approved by the
Audit Committee for final approval by the Board. During
the financial year 2015, the Board of Directors concluded
that the independence of the auditors was fully ensured
at all times.
Official notices are published in the Swiss Official
Gazette of Commerce (Schweizerisches
Handelsamtsblatt).
The Company website www.myriadgroup.com contains
extensive information on the business activities,
Company structure, financial reports, media releases,
investor relations, etc.
Web links regarding the SIX Swiss Exchange push-/
pull-regulations concerning ad hoc publicity issues are:
Investor relations contacts:
http://www.myriadgroup.com/investors/contacts/
Subscribe to Email alerts:
http://www.myriadgroup.com/investors/email-alerts/
The Audit Committee also evaluates the effectiveness of
the auditors in accordance with Swiss law and with
regard to the audit of the Company’s consolidated
financial statements that are prepared in compliance with
International Financial Reporting Standards (IFRS). It
then makes a recommendation to the Board on the
appointment of the audit firm. Upon this
recommendation, the Board of Directors itself verifies
once per year the selection of the potential auditors, in
order to propose its preferred audit firm for election to the
shareholders at the General Meeting of Shareholders.
When the annual and half-year results are released,
Myriad Group organises a telephone conference for the
media and the financial community to discuss details of
the reported earnings. The presentations that are used at
analysts/media conferences or during conference calls
are also available under the same web link as the
financial reports (see link above).
The Audit Committee assesses the qualification,
independence and performance of the external auditors
as well as the co-ordination and interaction between the
Company and the auditors. The Audit Committee thereby
considers various criteria, including operational
understanding of the Company’s business (especially the
mobile phone/mobile internet markets), sufficient
resources set aside by the auditors, independence, global
network of the auditors, understanding of the risks of a
technology company and the particular business risks of
the Myriad Group, practical recommendations and
support, co-operation with the Audit Committee and with
Senior Management. The Audit Committee and Senior
Management closely monitor the proportion between the
auditing fee for the annual financial statements and the
additional non-audit services performed by the auditors.
The Audit Committee examines potential consequences
regarding the independence of the auditors.
8. Information policy
For the benefit of its shareholders and the public interest,
the Company pursues an open and transparent
information policy. Myriad Group AG publishes its
financial reports in an annual report and on a half-year
basis. The annual and half-year reports are available on
the Company website in electronic form. The annual
report can also be obtained free of charge from the
Company in print form. The financial reports are available
at: http://www.myriadgroup.com/investors/publications
Strategic Report
The results of the annual audit of the annual accounts are
discussed in detail with the external auditors. The
auditors perform a detailed audit report on the financial
year results.
Press releases:
http://www.myriadgroup.com/press/news/
The current Articles of Incorporation and the
Organisational Regulations are available at:
http://www.myriadgroup.com/investors/incorporation
For investor relations contacts and a summary of
anticipated key dates in 2016 please refer to page 81 of
this Annual Report.
The Board of Directors follows the regulations of the
Swiss Code of Obligations with regards to the rotation
intervals of the lead auditor, i.e. the lead auditor has to be
rotated every seven years.
Myriad Group AG
Annual Report 2015
23
Compensation report 2015
1. Introduction
The report explains our compensation philosophy and
confirms the compensation that has been paid to the
Company’s Board members and Executive Committee in
2015. The report also confirms the decisions taken in 2015
that have set compensation policy and plans for 2016.
Our objective is to be clear, comprehensive and
transparent on the pay and benefits of senior executives
and to comply with applicable regulations including art.
663b bis CO, the SIX Exchange Regulation, the Swiss Code
of Best Practice for Corporate Governance, the Ordinance
against Excessive Compensation with respect to Listed
Stock Corporations (OaEC).
2. Compensation policy/guiding principles
2.1. Compensation philosophy
The compensation philosophy aims to ensure that the
Executive Committee is rewarded according to their
success in implementing the company strategy and their
contribution to company performance. The Executive
Committee compensation system is designed in line with
the following key elements:
Fairness and Transparency
Compensation programmes are straightforward, clearly
structured and transparent. They ensure fair compensation
based on the responsibilities and competencies required to
perform the role.
Shareholder alignment
A significant portion of compensation is delivered under
the form of equity stock options, ensuring participation in
the long-term success of the Company, maintaining
maximum operating cash in the business and ultimately
ensuring a strong alignment to the shareholders‘ interests.
Pay for performance and results
Variable compensation is tied directly to the achievement
of company strategic targets.
Market competitiveness
In order to be able to attract and retain talented executives
and employees, compensation levels are in line with
relevant market practice.
2.2. Alignment with company business model
Myriad’s strategy is to deliver shareholder value by being a
leading social mobile communication platform that
stimulates emotional relationships between people and
brands, enriched by engaging content and underpinned by a
diverse and strong product portfolio. In order to align the
compensation system with this strategy, the Board of
Directors determines specific, measurable and time-bound
performance metrics, including financial metrics such as
revenue and profit as well as non-financial metrics, which
indicate the success of its implementation.
24
Myriad Group AG
Annual Report 2015
The Board sets annual targets for each of these
performance metrics and compensates the Executive
Committee according to the extent to which the targets are
achieved. In addition to annual targets the Board also sets
more short-term objectives in recognition of the extremely
dynamic nature of the business, this allows the
compensation policy to reflect the nature of the market
environment in which the Group operates.
2.3. Executive team compensation benchmarking
To attract and retain key talent, it is important for us to offer
competitive compensation levels. Executives meeting their
objectives are generally awarded target compensation at a
level comparable to the median level of similar roles within
the benchmark companies (see below). In the event of
under- or over-performance, the actual compensation may
be lower or higher than the benchmark median.
Whilst the Compensation and Nomination Committee
(CNC) considers benchmarking information regarding
executive pay, any decisions on compensation are
ultimately based on the specific business needs of the
Company and the performance of the individual.
Benchmark companies are selected based on similar
companies listed on the SIX Swiss Exchange and also on
the Alternative Investment Market (AIM) in London.
Company
Exchange
Ticker
Cicor
Comet
Kardex
Crealogix
Craneware
Avanti
Accesso
Allocate
SIX
SIX
SIX
SIX
AIM
AIM
AIM
AIM
CICN
COTN
KARN
CLXN
CRW
AVN
ACSO
ALL
3. Organisation and competencies
3.1. Description of the Compensation and
Nomination Committee
The CNC shall be composed of at least two non-executive
members of the Board of Directors who are elected annually
and individually by the General Meeting of the Shareholders.
Re-election is possible. If there are vacancies in the CNC, the
Board of Directors shall appoint substitute members from
among its members until completion of the next Annual
General Meeting of the Shareholders.
The General Meeting of the Shareholders may remove and
replace individual members at any time. All members of the
CNC shall be independent of the Executive Committee and
free from any business or other relationship, which could
interfere with the exercise of their independent judgment.
The CNC holds meetings as often as the business and
affairs of the Company require and whenever it is requested
by one of its members, but at least twice a year.
Strategic Report
The CNC shall assist the Board of Directors in the mediumterm and long-term succession planning for members of
the Board of Directors and of the Executive Committee. It
submits nominations for members of committees to the
Board of Directors as well as election and de-selection
requests for members of the Executive Committee. The
CNC shall assist the Board regarding the determination
and monitoring of compensation policies and guidelines
as well as of performance targets. In addition, it shall
assist the Board in the preparation of proposals to the
General Meeting of the Shareholders concerning the
Compensation of the Board of Directors and of the
Executive Committee as well as in the preparation of the
annual Compensation Report. The CNC may submit
proposals to the Board of Directors concerning further
compensation issues. The Board of Directors may delegate
further tasks in connection with compensation, human
resources and related matters to the CNC.
The Board of Directors shall submit the annual
compensation report to the General Meeting of the
Shareholders for a consultative vote.
The CNC interacts with the Board on matters of
compensation when required, but at least twice per year to
set compensation for the coming year and to review variable
target achievements. In 2015 the CNC met on 3 occasions.
Pension and other benefits
The primary purpose of pension and insurance plans is to
establish a level of security for associates and their
dependents with respect to age, health, disability and
death. The level and scope of pension and insurance
benefits provided is country-specific, influenced by local
market practice and regulations.
During 2015 the following members of the Board served on
the CNC:
• Erik Hansen
• Mauro Saladini
• for the maximum Compensation of the Board of
Directors for the upcoming business year;
• for the maximum fixed Compensation of the Executive
Committee for the upcoming business year;
The Board of Directors may submit differing proposals to
the General Meeting of the Shareholders.
If the General Meeting of the Shareholders denies to
approve a total or partial amount, the Board of Directors
may submit a new proposal during the same General
Meeting. Should the Board of Directors not submit a new
proposal or if this new proposal is also denied, the Board of
Directors may convoke a new General Meeting of the
Shareholders, submitting new proposals for approval of
the total amounts or various partial amounts.
Variable Compensation
Annual Incentive
Share based Compensation
Annual base compensation
The level of base compensation reflects each associate’s
key areas of responsibilities, job characteristics,
experience and skill sets. It is paid in cash, typically
monthly. Base compensation is reviewed annually, and any
increase reflects both merit based on performance, as well
as market movements.
Annual incentive
For the Annual Incentive of Executive Committee
members, a target incentive is defined as a percentage of
base compensation at the beginning of each performance
year. In FY 2015 Executive Committee members had
different maximum annual incentives within the range 50%
to 80% of base compensation. This performance related
compensation is a variable incentive designed to reward
the achievement of business objectives of the Group over a
time horizon of one year. It is paid in cash bi-annually
based on group performance objectives set by the CNC.
Executive Committee members are entirely incentivised
according to group financial and other targets (§25 of the
Company’s Articles of Incorporation). These targets are set
by the Board of Directors according to the Group’s strategic
goals and include a range of corporate and sector-specific
goals and financial and non-financial measures, including
revenue, EBITDA, user numbers and engagement
measures. The Board of Directors shall determine the
weighting of the objectives and the respective target goals
and evaluate the achievement of the goals at the end of
the year.
Myriad Group AG
Annual Report 2015
25
3.2. Approval of Compensations / §23 of the Articles
of Incorporation
The General Meeting of Shareholders approves annually,
separately and binding the proposals of the Board of
Directors with respect to the total amounts:
Fixed Compensation and Benefits
Annual base compensation
Pension and other benefits
To comply with best practice in Corporate Governance,
Members of the Executive Committee are not present at
meetings where their personal compensation is being
discussed.
4. Compensation components
4.1. Executive compensation components
Compensation report 2015 continued
Share based compensation
The purpose of share based Compensation is two-fold, to
align the interest of the Executive Committee with
shareholders and to ensure that cash compensation is
kept to reasonably lower levels to maximize operating cash
in the Group.
compensation already approved is not sufficient to cover
this new compensation. The supplementary amount per
each new member of the Executive Committee and per
compensation period shall not exceed 40% of the
maximum aggregate amount of fixed and variable
compensation last approved.
The Board of Directors, upon recommendation of the CNC,
approves the grant of stock options to the Executive
Committee for the purpose of retaining key contributors.
Stock options granted during financial year 2015 vest
as follows:
4.2. Board compensation components
The annual overall compensation for each member of the
Board of Directors depends on the responsibilities carried
out and the time effectively spent in the year under review.
• For eligible persons being granted with stock options,
1/3 of the options vest 12 months after the grant date
and 1/36 vests on each of the 24 consecutive months.
Other compensation
Additional fees
During 2015, no other payments (or waivers of claims) were
made to members of the Executive Committee or to
“persons closely linked” to them.
Loans
Incorporation, loans and credits to members of the Board
of Directors and of the Executive Committee may not
exceed a maximum of CHF 100,000 per member, including
related parties. Loans and credits to members of the Board
are granted at market prices. Loans and credits to
members of the Executive Committee are granted at
conditions for employees in line with the industry
standards.
A loan totalling USD 34,560 was granted to a current
member of the Executive Committee in June 2015.
The loan attracted interest of 4% per annum.
The outstanding balance at 31 December 2015 was USD
34,080. No other loans were granted to members of the
Executive Committee or Board of Directors or their related
persons during 2015.
USD 34,080 was outstanding as of 31 December 2015 (31
December 2014: USD nil).
Notice periods and change of control clauses
• Notice periods for the Executive Committee range from
six to twelve months.
• Should a change of control occur and they are not
offered a similar role by the new controlling entity then
any unvested stock options would vest on the trigger of
these two events.
• There are no severance payment clauses.
Incorporation, the Company is authorized to grant a
supplementary amount to each new member of the
Executive Committee after the General Meeting of the
Shareholders has approved the compensation if the
26
Myriad Group AG
Annual Report 2015
Members of the Board receive a fixed fee and additional fees
for special tasks such as committee chairmanship, vicechairmanship or membership, and any other extraordinary
activities/meetings. The fees are paid in cash.
Function
CHF’000
Chairman of the Board
Board member
Additional fee for Chair of Audit Committee1
Additional fee for Chair of Compensation Committee1
132,000
45,000
15,000
15,000
1. Chair fee’s for Audit and CNC committee’s are payable in addition to basic
Board member fee, so for example if a Board Member is Chair of the Audit
Committee his total Compensation is CHF 60,000.
In addition, each member of the Board receives a fixed
number of Myriad shares.
Function
Shares
Chairman of the Board
Board member
On joining the Board
30,000 annual award
10,000 annual award
30,000 only on commencement
Additional fees
During 2015, the CNC unanimously agreed to pay Erik
Hansen an additional CHF 45,000 for increased time
commitments, primarily during the second half of 2015.
5. Compensation for the financial year under review
The following quantitative disclosures are subject to audit
according to the OaEC and further Swiss law.
Compensation amounts disclosed below include amounts
for employer’s social security costs, which according
to best practice guidance from the Swiss Institute of
Auditors (the “Treuhandkammer”) should be considered
Compensation. These costs are included in
“other compensation.”
The fair value of employee stock options granted is
estimated at the date of grant using the Black-Scholes
share option pricing model (in prior years, a binomial
model), taking into account the terms and conditions
upon which the options were granted, details of the
assumptions used in the calculation of fair values at
grant dates are disclosed in note 10 of the consolidated
financial statements.
Strategic Report
Executive Committees’ compensation is paid in USD and GBP. Executive Committees’ total compensation for 2015
amounted to CHF 9,362,000 (2014: CHF 3,170,000). The total compensation of the highest paid individual was CHF
3,281,000 (2014: CHF 965,000). This is calculated using the following average exchange rates for the period:
• 2015: (1 GBP = 1.479 CHF) and (1 USD = 0.965 CHF)
• 2014: (1 GBP = 1.506 CHF) and (1 USD = 0.911 CHF)
5.1. Compensation of the members of the Executive Committee (audited)
2015 compensation
USD’000
Executive Committee of whom
Stephen Dunford, CEO (highest paid individual)
Base
compensation1
Annual
Incentive2
Total cash
compensation
2015
Total fair value
of Share Option
awards3
Other
compensation4
Total
compensation
2015
1,270
371
623
171
1,893
542
6,397
2,259
1,418
601
9,708
3,402
2014 compensation
USD’000
Executive Committee of whom
Stephen Dunford, CEO (highest paid individual)
Base
compensation1
Annual
Incentive2
Total cash
compensation
2014
Total fair value
of Share Option
awards3
Other
compensation4
Total
compensation
2014
1,144
360
900
255
2,044
615
1,007
280
433
166
3,484
1,061
1. The base compensation includes employee social security costs.
2. Bonus compensation disclosed in 2015 relates to amounts paid or payable in respect of 2015 performance made to members of Executive Committee.
3. The amount noted above is the total fair-value of options awarded in the period, this is not the amount that affects profit or loss in the period as this charge is
allocated over the vesting period of the options according to IFRS 2 in the Financial Statements.
4. Other compensation includes social insurance, pension and other non-cash benefits. Other compensation also includes the estimated employer’s social security
applicable to the fair value of share option awards in the period.
1. The base compensation includes employee social security costs.
2. Bonus compensation disclosed in 2014 relates to amounts paid or payable in respect of 2014 performance made to members of Executive Management.
4. Other compensation includes social insurance, pension and other non-cash benefits. Other compensation also includes the estimated employer’s social security
applicable to the fair value of share option awards in the period.
No termination benefits were paid to members of the Executive Committee who left the Company during 2015 or 2014.
5.2. Compensation of the members of the Board of Directors (audited)
2015 compensation
Function
Chairman of the Board, Head of CNC
Board Member, Head of AC, Member CNC
Board Member
Total
Other
compensation1
Total Fair Value
of Options
granted2
Total
compensation
2015
200
63
47
–
5
–
54
18
18
254
86
65
310
5
90
405
1. Other compensation includes social security payments made by the Company on behalf of the individual. Other compensation also includes the estimated
employers social security applicable to the fair value of share option awards in the period.
2014 compensation
USD’000
Function
Erik Hansen
Richard Schlauri1
Mauro Saladini
David Nuescheler 2
Chairman of the Board, Head of CNC
Resigned
Board Member, Head of AC, Member CNC
Board Member
Total
Fixed
compensation
Other
compensation3
Total Fair Value
of Options
granted4
Total
compensation
2014
143
18
66
26
–
–
5
–
15
–
5
15
158
18
76
41
253
5
35
293
1. Richard Schlauri did not seek re-appointment to the Board of Directors at the Company’s General Meeting of the Shareholders on 26 May 2014.
2. David Nuescheler was appointed as a Member of the Board of Directors at the Company’s General Meeting of the Shareholders on 26 May 2014
3. Other compensation includes social security payments made by the Company on behalf of the individual. Other compensation also includes the estimated
employer’s social security applicable to the fair value of share option awards in the period.
Myriad Group AG
Annual Report 2015
27
USD’000
Erik Hansen
Mauro Saladini
David Nuescheler
Fixed
compensation
Report of the statutory auditor on the compensation report
We have audited the accompanying Compensation report (section 5 on pages 26-27) dated 24 February 2016 of Myriad
Group AG for the year ended 31 December 2015.
Board of Directors’ responsibility
The Board of Directors is responsible for the preparation and overall fair presentation of the Compensation report in
accordance with Swiss law and the Ordinance against Excessive Compensation in Stock Exchange Listed Companies
(Ordinance). The Board of Directors is also responsible for designing the Compensation system and defining individual
Compensation packages.
Auditor’s responsibility
Our responsibility is to express an opinion on the accompanying Compensation report (sections on pages 20-23). We
conducted our audit in accordance with Swiss Auditing Standards. Those standards require that we comply with ethical
requirements and plan and perform the audit to obtain reasonable assurance about whether the Compensation report
complies with Swiss law and articles 14–16 of the Ordinance.
An audit involves performing procedures to obtain audit evidence on the disclosures made in the Compensation report
with regard to compensation, loans and credits in accordance with articles 14–16 of the Ordinance. The procedures
selected depend on the auditor’s judgment, including the assessment of the risks of material misstatements in the
Compensation report, whether due to fraud or error. This audit also includes evaluating the reasonableness of the
methods applied to value components of Compensation, as well as assessing the overall presentation of the
Compensation report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Opinion
In our opinion, the Compensation report of Myriad Group AG for the year ended 31 December 2015 complies with Swiss
law and articles 14–16 of the Ordinance.
PricewaterhouseCoopers AG,
Martin Kennard
Blaženka Kovács-Vujević
Audit expertAudit expert
Auditor in charge
Zürich, 24 February 2016
28
Myriad Group AG
Annual Report 2015
Strategic Report
29
Myriad Group AG
Annual Report 2015
Management discussion and analysis of results
Financial overview
FY 2015
IFRS
USD’000
27,296
16,566
60.7%
(13,054)
(47.8%)
(15,187)
(55.6%)
(65,482)
(67,912)
(17,068)
37,797
36,276
18.6%
180
283,985
Revenue
Adjusted gross profit1
Adjusted gross margin in %
Adjusted EBITDA 2
Adjusted EBITDA margin in %
EBITDA
EBITDA margin in %
EBIT
Net result
Operating cash flow
Shareholders’ equity
Debt:equity ratio in %
Total headcount at year end (FTE)
Market capitalisation (CHF ‘000)
FY 2014
IFRS
40,181
27,685
68.9%
7,518
18.7%
12,427
30.9%
8,622
8,111
(1,211)
23,087
65,535
11.7%
172
434,086
1. Gross profit before amortisation, impairment, restructuring costs and non-recurring items.
2. EBITDA before non-recurring items and restructuring costs.
Revenues
DSD faced strong headwinds in FY 2015, despite winning
some larger contracts, including two with Microsoft to
provide embedded Java technology on newly introduced
low-end feature phones and browser technology for
Windows devices, and additional revenue from an
agreement signed at the end of 2014 with Jolla Oy for
Myriad’s Alien Dalvik product on Sailfish OS-based
smartphones. Revenue equalled USD 12.9m down 34%
from the prior year (FY 2014 USD 19.6m).
Myriad Connect delivered solid revenue growth with USD
13.6m in FY 2015, an 13% increase over FY 2014 (FY 2014
USD 12.0m). The second half of 2015 also showed
accelerating revenue growth with USD 7.5m for H2 2015, a
23% increase from H1 2015 (USD 6.1m). The Myriad
Connect Division revenue for the year was underpinned by
strong sales in traditional USSD core services, such as
self-care and operational messaging, and an expansion in
Value Added Services, such as social messaging over SMS
and USSD and mobile money initiatives. Myriad continued
to leverage its strong relationships with global telecom
operators like Orange Group, which is running Myriad
services with 12 of its in-country operators throughout
Africa, and the Telefónica Group, which is running Myriad
services across 8 of its in-country operators throughout
Latin America.
Cost of revenues and gross margins
Total adjusted gross margin decreased 8.2% to 60.7%
(68.9% in FY 2014). The fall is as a result of the change in
the sales mix with the planned sun-setting of legacy
messaging services with several North American mobile
operators, and the expiration of legacy support and service
contracts with Nokia all acquired with Synchronica in 2012.
Research and development
Research and development (R&D) gross expenses before
restructuring costs amounted to USD 8.9 million or 32.6%
of total revenues (USD 10.4 million or 25.9% of revenue in
30
Myriad Group AG
Annual Report 2015
FY 2014). The decrease in overall R&D expenses reflects
cost efficiencies achieved by bringing the development of
the Versy client’s in-house during the second half of 2015.
R&D capitalisation decreased to USD 0.6 million in FY 2015
(USD 1.6 million in FY 2014), or 6.7% of gross R&D
expenditure (15.4% in FY 2014).
Sales and marketing
Sales and marketing expenses (S&M) before restructuring
and non-recurring costs increased by USD 5.1 million in
2015
to USD 11.1 million (USD 6.0 million in FY 2014). Following
the launch of ‘Channels’ in 2015 Myriad has grown the user
base and followers through partnerships with international
content providers and related targeted promotional
campaigns.
General and administrative
General and administrative expenses (G&A) before
restructuring costs, depreciation, bad debt expense and
share option charges has decreased by USD 0.5 million to
USD 5.7 million (USD 6.2 million in FY 2014), reflecting the
continued steps taken by management to reduce the
number of offices and rationalisation of support activities.
Restructuring expenses
Restructuring expenses of USD 2.1 million (included within
cost of revenue, R&D, S&M and G&A expenses) were
incurred in 2015 relating to changes in the Executive
Management Team and the rationalisation of our business
in France.
Other income and expenses
Other income of USD 0.6 million (USD 5.1 million in FY 2014)
comprises of R&D tax credits in France and the United
Kingdom. FY 2014 largely comprised a settlement received
from the liquidation of MobiWire, the early settlement of the
deferred consideration due to Nokia, R&D grant income in
Canada and R&D tax credits in France.
EBITDA
Adjusted EBITDA for FY 2015 was a loss of USD 13.1m
(profit USD 7.5 million in FY 2014), mostly reflecting the
USD 11.8m investment in the Versy product, including
rebranding, research and development of the new Versy
flagship product, increased marketing activity, and content
acquisition.
Amortisation of intangible assets
The amortisation of intangible assets amounted to USD
2.4 million (USD 2.8 million in FY 2014) and includes the
amortisation of capitalised development costs and
intellectual property acquired with Synchronica plc in
2012.
Finance income and expenses
Net finance costs of USD 2.2 million (FY 2014: income of
USD 0.6 million) includes USD 2.1 million of foreign
exchange losses (FY 2014: gains of USD 1.9 million);
interest payable on loans, finance leases and other finance
costs USD of 0.1 million (USD 0.2 million in FY 2014). 2014
also included non-cash finance charge relating to the
unwinding of the discount on the deferred consideration
payable to Nokia up to the settlement date. This liability
was settled in full in FY 2014.
Net result and earnings per share
As a result of the aforementioned impairments, the net
loss for FY 2015 amounted to USD 67.9 million (profit of
USD 8.1 million in FY 2014), representing a basic loss per
share of USD 0.63 (earnings of USD 0.09 per share in FY
2014).
Cash flow
Net cash used in operating activities during the year was
USD 17.1 million (USD 1.2 million in FY 2014), reflecting the
planned investment in the Versy platform during the year
of USD 11.8 million combined with a reduction in the
balance of trade and other payables.
Net cash generated by financing activities was USD 34.1
million (USD 16.0 million in FY 2014). FY 2015 included the
successful private placement of 8,600,000 shares on 8
April 2015 resulting in net proceeds to the company of USD
34.0 million. FY 2014 included a private placement
resulting in net proceeds to the company of USD 30.1
million and the final contractual payments of USD 12.0m to
Nokia arising from Synchronica Limited’s acquisition of
Nokia’s North American Network Operator Business.
Liquidity and capital structure
As at 31 December 2015 the balance of cash and cash
equivalents was USD 37.8 million (USD 23.1 million in FY
2014). The net funds position (cash and cash equivalents
less interest-bearing debt) amounted to USD 29.5 million at
year end 2015 (USD 22.0 million in FY 2014) whilst
shareholders’ equity decreased to USD 36.3 million (USD
65.5 million in FY 2014) reflecting net losses in the year
and the raising of additional capital as a result of the
private placement.
Operating result (EBIT)
EBIT amounted to a loss of USD 65.5 million (FY 2014:
profit of USD 8.6 million). EBIT has been impacted by
non-cash charges associated with an impairment charge
of USD 47.5m against intangible assets and share option
Myriad Group AG
Annual Report 2015
31
Impairment of intangible assets
The Group has also incurred non-cash impairment charges
of USD 47.5m against intangible assets predominantly
arising out of the acquisition of Synchronica plc in 2012.
The impairment charges have arisen due to the
technological evolution of Versy during FY 2015. The Versy
product has been launched and will continue to evolve
based on the realisation that a social messaging
application based around content, rather than a pure chat
application, could build a more valuable engaged user
base. To deliver and respond to the accelerating transition
to smartphones in our target markets, Versy needed to
focus more on smartphone architecture that would be able
to support the discovery of richer content streams in video
and audio. The combination of an increased strategic
focus on a smartphone-only application and further
analysis of the expected route to monetisation, means
Myriad no longer expects to significantly monetise through
the technology assets and network operator relationships
acquired with the Synchronica transaction.
These non-cash charges, together with the increased
investment in Versy, have contributed to the Group’s net
loss of USD 67.9m.
EBITDA has also been impacted by increased share option
Following an increase to conditional capital approved by
shareholders at the 2015 Annual General Meeting, these
option grants were made to key members of the
engineering and management teams and are intended to
align their motivation with the benefit of shareholders as a
whole.
Strategic Report
Other expenses in 2015 were nil (USD 3.5 million in FY 2014).
FY 2014 included French social plan costs of USD 2.5 million
and USD 1.0 million additional costs from the legal
settlement with Motorola Mobility in respect of legal
proceedings brought in 2011.
Consolidated income statement
Year ended 31 December
USD’000, except for per share information
Licence revenue
Service revenue
Total revenue
2015
2014
15,671
11,625
21,940
18,241
Note
4
27,296
40,181
6
15
(13,284)
(47,498)
(5,862)
–
Total cost of revenue
(60,782)
(5,862)
Gross (loss) profit
(33,486)
34,319
Research and development, net of capitalised costs
Sales and marketing
General and administrative
Other income
Other expenses
(8,776)
(11,551)
(12,293)
624
–
(8,842)
(4,143)
(14,310)
5,120
(3,522)
(65,482)
8,622
5
(2,222)
1,963
(1,392)
Cost of revenue
7
8
9
9
(Loss) profit from operations
Finance income
Finance costs
11
11
(Loss) profit before income tax
Income tax charge
(67,699)
(Loss) profit for the year attributable to owners of the parent
Basic earnings per share (USD)
Diluted earnings per share (USD)
(213)
12
(67,912)
8,111
(0.63)
(0.63)
0.09
0.08
13
13
These consolidated financial statements should be read in conjunction with the accompanying notes.
32
Myriad Group AG
Annual Report 2015
9,193
(1,082)
Consolidated statement of comprehensive income
(Loss) profit for the year
Other comprehensive income (expense):
Items that will not be reclassified to profit or loss
Actuarial gain (loss) on post employment benefit obligations
2015
Note
(67,912)
21
23
2014
8,111
(36)
Items that may be subsequently reclassified to profit or loss
Exchange differences on translating foreign operations
(487)
(4,397)
Other comprehensive expense for the year, net of tax
(466)
(4,433)
Total comprehensive (loss) profit for the year attributable to owners of the parent
(68,378)
Strategic Report
Year ended 31 December
USD’000
3,678
There is no income tax relating to any of the components of other comprehensive income.
Myriad Group AG
Annual Report 2015
33
Consolidated statement of financial position
At 31 December
USD’000
ASSETS
Non-current assets
Furniture and equipment
Intangible assets
Long-term investments and other financial assets
Deferred tax asset
Current assets
Inventories
Trade and other receivables
Note
2015
2014
14
15
16
24
351
6,940
211
100
388
57,085
225
148
7,602
57,846
136
12,198
37,797
72
13,513
23,087
50,131
36,672
57,733
94,518
17
18
19
TOTAL ASSETS
EQUITY AND LIABILITIES
Equity attributable to owners of the parent
Share capital
Share premium
Cumulative change in fair value of financial assets
Cumulative translation adjustment
Accumulated losses
20
Total equity attributable to owners of the parent
Liabilities
Non-current liabilities
Loans and borrowings
Trade and other payables
Pension liabilities
Deferred tax liabilities
Current liabilities
Trade and other payables
Current income tax liabilities
Deferred revenue
Provisions
11,053
300,922
36
(16,179)
(259,556)
10,231
266,407
36
(19,474)
(191,665)
36,276
65,535
5,870
–
183
6
6,537
61
283
458
6,059
7,339
884
9,837
928
1,739
2,010
1,122
14,543
860
2,174
2,945
21
22
23
24
21
22
25
15,398
21,644
Total liabilities
21,457
28,983
TOTAL EQUITY AND LIABILITIES
57,733
94,518
34
Myriad Group AG
Annual Report 2015
Consolidated statement of changes in equity
Note
Balance at 1 January 2014
20
20
20
10
Total transactions with owners
Balance at 31 December 2014
Comprehensive loss:
Loss for year
Exchange differences on
translating foreign operations
Actuarial gain on post employment benefit obligations
Total comprehensive loss for the year
translation of equity items
Transaction with owners, recorded directly in equity
Share placement from authorised capital
Cost of share capital increases
Share options exercised in year
Stock option expense
Total transactions with owners
Balance at 31 December 2015
20
20
10
10,340
266,122
36
–
–
–
–
–
–
–
(4,397)
8,111
–
8,111
(4,397)
–
(4,397)
31,356
(36)
8,075
–
(36)
3,678
–
–
–
–
–
–
–
620
–
–
–
30,796
785
(1,274)
547
1,298
–
620
–
–
(1,176)
–
–
(30,180)
–
–
–
1,033
–
–
34
–
29,763
165
(1,274)
513
1,298
–
–
–
–
–
Total
equity
(46,433) (200,360)
29,705
1,067
30,465
–
10,231
266,407
36
–
–
–
–
–
–
–
(487)
(67,912)
–
(67,912)
(487)
–
(487)
3,782
21
(67,891)
–
21
(68,378)
–
–
–
(108)
–
–
(3,674)
–
–
–
905
–
25
–
35,643
(2,547)
333
4,760
–
–
–
–
930
38,189
–
11,053
300,922
36
(19,474) (191,665)
–
–
–
–
–
–
–
–
–
–
(16,179) (259,556)
32,152
65,535
Comprehensive (loss) profit:
Profit for year
translating foreign operations
Actuarial gain on post employment benefit obligations
Total comprehensive (loss) profit for the year
translation of equity items
Transaction with owners, recorded directly in equity
Share placement from authorised capital
Sale of own shares
Share options exercised in year
Share capital
Cumulative
translation Accumulated
adjustment
losses
Strategic Report
USD’000
Share
premium
Changes in
fair value of
financial
assets
36,548
(2,547)
358
4,760
39,119
36,276
Myriad Group AG
Annual Report 2015
35
Consolidated statement of cash flows
At 31 December
USD’000
2015
Note
Cash flows from operating activities
(Loss) profit for the year
Adjustments for:
Depreciation
Amortisation
Non-cash stock option expense
Decrease in defined benefit pension liability
Doubtful debt expense
Other non-cash income
Profit on disposal of furniture and equipment
Net finance costs (income)
Income tax expense
(67,912)
2014
8,111
356
2,441
47,498
4,760
(49)
372
(565)
–
2,217
213
979
2,826
–
1,298
(12)
431
(14,649)
(93)
(571)
1,082
Decrease in trade and other receivables
(Increase) decrease in inventories
Decrease in trade and other payables
Decrease in deferred revenue and advances received
Income taxes paid
(10,669)
512
(74)
(6,023)
(438)
(376)
(598)
3,919
5
(2,289)
(2,076)
(172)
Net cash used by operating activities
(17,068)
(1,211)
(321)
(580)
–
(5)
(192)
(1,566)
134
146
(906)
(1,478)
(137)
–
–
–
36,906
–
(2,547)
(131)
(3,876)
943
101
(11,950)
31,343
785
(1,274)
(108)
34,091
15,964
Cash flows from investing activities
Purchases of furniture and equipment
Capitalised development costs
Net proceeds from sale of furniture and equipment
(Purchases) proceeds from financial assets
14
15
15
10
23
11
12
14
15
Net cash used from investing activities
Cash flows from financing activities
Repayment of borrowings
Proceeds from borrowings
Repayment of loans made to related parties
Payment of deferred consideration
Proceeds from issue of share capital
Sale of own shares
Interest paid
21
21
30
22
20
Net cash generated by financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Effect of exchange rate fluctuations on cash and cash equivalents
19
16,117
23,087
(1,407)
13,275
11,969
(2,157)
Cash and cash equivalents at end of year
19
37,797
23,087
36
Myriad Group AG
Annual Report 2015
Notes to the consolidated financial statements
Strategic Report
1 General information
The Myriad Group (‘Myriad’ or ‘the Group’) consists of Myriad Group AG (‘the Company’), a company incorporated in
Zurich, Switzerland, and its consolidated subsidiaries. Myriad Group AG (ticker: MYRN) shares are quoted on the SIX
Swiss Exchange (SIX).
The consolidated financial statements are presented in US dollars (USD), rounded to the nearest thousand. Although
the parent company is domiciled in Switzerland, the consolidated financial statements are presented in USD since the
Group’s cash flows are denominated to a large extent in USD.
2 Summary of significant accounting policies
The principal accounting policies applied in the preparation of these consolidated financial statements are set out
below.
2.1 Basis of preparation
The consolidated financial statements have been prepared in accordance with International Financial Reporting
Standards (IFRS), International Financial Reporting Interpretations as issued by the IFRS Interpretations’ Committee
(IFRICs) and the requirements of Swiss law. The consolidated financial statements have been prepared under the
historical cost convention.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting
estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting
policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates
are significant to the consolidated financial statements are disclosed in note 3.
The principal accounting policies have been applied consistently throughout the year.
2.1.1 Going concern
These group financial statements have been prepared on the going concern basis which is supported by detailed
monthly cash flow and trading forecasts covering the period to 30 June 2017 and a medium-term business plan
thereafter.
The group cash flow forecast has additionally been modelled using a range of reasonably possible sensitivities, which
all indicate that the Group has sufficient liquid funds to meet its financial commitments as they fall due throughout the
forecast period. On this basis, the Board and Management are satisfied that the Group has sufficient funds to meet its
financial obligations as they fall due. The Group therefore continues to adopt the going concern basis in preparing its
consolidated financial statements.
IFRS 2 (amendments) ‘Share-based Payment’ incorporates amendments resulting from Annual Improvements to IFRSs
2010-2012 Cycle. The change amends the definitions of ‘vesting condition’ and ‘market condition’ and adds definitions
for ‘performance condition’ and ‘service condition’ (which were previously part of the definition of ‘vesting condition’).
IFRS 3 (amendments) ‘Business Combinations’, arise from Annual Improvement Cycles for 2010-2012 and 2011-2013.
The 2010-2012 cycle amendment concerning accounting for contingent consideration in a business combination,
clarifies that contingent consideration that is classified as an asset or a liability shall be measured at fair value at each
reporting date. The 2011-2013 cycle amendment considering the scope of exception for joint ventures, clarifies that
IFRS 3 excludes from its scope the accounting for the formation of a joint arrangement in the financial statements of
the joint arrangement itself.
IFRS 8 (amendments) ‘Operating Segments’, arises from Annual Improvements 2010-2012 Cycle. The amendments
require an entity to disclose the judgements made by management in applying the aggregation criteria to operating
segments and clarifies that an entity shall only provide reconciliations of the total of the reportable segments’ assets
to the entity’s assets if the segment assets are reported regularly.
Myriad Group AG
Annual Report 2015
37
2.1.2 Changes in accounting policy and disclosures
(a) New standards, amendments and interpretations adopted by the Group
The following new standards, amendments to standards or interpretations are mandatory for the first time for the
financial year beginning 1 January 2015:
Notes to the consolidated financial statements continued
2 Summary of significant accounting policies continued
IFRS 13 (amendments) ‘Fair Value Measurement’, incorporates changes resulting from Annual Improvements 2011-2013
Cycle. The amendment clarifies that the scope of the portfolio exception defined in paragraph 52 of IFRS 13 includes
all
contracts accounted for within the scope of IAS 39 Financial Instruments: Recognition and Measurement or IFRS 9
Financial Instruments, regardless of whether they meet the definition of financial assets or financial liabilities as
defined in IAS 32 Financial Instruments: Presentation.
IAS 19 (amendments) ‘Employee Benefits’ clarify the requirements that relate to how contributions from employees or
third parties that are linked to service should be attributed to periods of service. In addition, it permits a practical
expedient if the amount of the contributions is independent of the number of years of service.
IAS 24 (amendments) ‘Related Party Disclosures’, result from Annual Improvements 2010-2012 Cycle and pertain to
disclosure of information ‘elsewhere in the interim financial report’. The provide clarification of the meaning of
‘elsewhere in the interim report’ and requires a cross-reference.
IAS 38 (amendments) ‘Intangible Assets’, arise from Annual Improvements 2010-2012 Cycle (proportionate restatement
of accumulated depreciation on revaluation). The amendment clarifies that when an intangible asset is revalued the
gross carrying amount is adjusted in a manner that is consistent with the revaluation of the carrying amount.
Other standards, amendments and interpretation which are effective for the financial year beginning on 1 January 2015
are not material to the Group.
(b) New standards, amendments and interpretations not yet adopted
A number of new standards and amendments to standards and interpretations are effective for annual periods
beginning after 1 January 2016, and have not been applied in preparing these consolidated financial statements. None
of these are expected to have a significant effect on the consolidated financial statements of the Group, except the
following set out below:
IFRS 5 (amendments) ‘Non-current Assets Held for Sale and Discontinued Operations’, incorporates amendments
resulting from September 2014 Annual Improvements to IFRSs and relate to changes in methods of disposal. The
change adds specific guidance in IFRS 5 for cases in which an entity reclassifies an asset from held for sale to held for
distribution or vice versa and cases in which held-for-distribution accounting is discontinued. Applicable for annual
periods beginning on or after 1 January 2016.
IFRS 9 ‘Financial Instruments’ is the finalised version of the standard, incorporating requirements for classification and
measurement, impairment, general hedge accounting and derecognition and is effective for annual periods beginning
on or after 1 January 2018 with early adoption permitted (subject to local endorsement requirements).
IFRS 15 ‘Revenue from contracts with customers’ deals with revenue recognition and established principles for
reporting useful information to users of financial statements about the nature, amount, timing and uncertainty of
revenue and cash flows arising from an entity’s contracts with customers. Revenue is recognised when a customer
obtains control of a good or service and thus has the ability to direct the use and obtain the benefits from the good or
service. The standard replaces IAS 18 ‘Revenue’ and IAS 11 ‘Construction contracts’ and related interpretations. The
standard is effective for annual periods beginning on or after 1 January 2018 and earlier application is permitted
subject to EU endorsement. The Group is assessing the impact of IFRS 15.
IFRS 16 ‘Leases’ specifies how an IFRS reporter will recognise, measure, present and disclose leases. The standard
provides a single lessee accounting model, requiring lessees to recognise assets and liabilities for all leases unless the
lease term is twelve months or less or the underlying asset has a low value. Lessors continue to classify leases as
operating or finance, with IFRS 16’s approach to lessor accounting substantially unchanged from its predecessor, IAS
17. IFRS 16 applies to annual reporting periods beginning on or after 1 January 2019.
IAS 1 (amendments) ‘Presentation of Financial Statements’, aim at clarifying IAS 1 to address perceived impediments
to preparers exercising their judgement in presenting their financial reports. They are effective for annual periods
beginning on or after 1 January 2016, with earlier application being permitted.
IAS16 (amendments) ‘Property, Plant and Equipment’, provide additional guidance on how the depreciation or
amortisation of property, plant and equipment and intangible assets should be calculated. They are effective for annual
38
Myriad Group AG
Annual Report 2015
Strategic Report
periods beginning on or after 1 January 2016, with earlier application being permitted. The requirements of IAS 16 are
amended to clarify that a depreciation method that is based on revenue that is generated by an activity that includes
the use of an asset is not appropriate. This is because such methods reflect a pattern of generation of economic
benefits that arise from the operation of the business of which an asset is part, rather than the pattern of consumption
of an asset’s expected future economic benefits.
There are no other IFRSs or IFRIC interpretations that are not yet effective that would be expected to have a material
impact on the Group.
2.2 Consolidation
Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an
entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the
ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on
which control is transferred to the Group. They are de-consolidated from the date that control ceases.
Goodwill is initially measured as the excess of the aggregate of the consideration transferred and the fair value of
non‑controlling interests over the net identifiable assets acquired and liabilities assumed. If the cost of acquisition is less
than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the income statement.
The Group uses the acquisition method to account for business combinations. The consideration transferred for the
acquisition of a subsidiary is the fair value of the assets transferred, the liabilities incurred and the equity interests
issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a
contingent consideration arrangement. Acquisition-related costs are expensed as incurred and included in other
operating expenses.
Inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated.
Unrealised profits and losses are also eliminated. Accounting policies of subsidiaries have been changed where
necessary to ensure consistency with the policies adopted by the Group.
2.3 Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating
decision-maker. In accordance with the management structure and the reporting made to the Board of Directors (the
Group’s chief operating decision maker), the operating segments are the four business units ‘Device Solutions Division’
‘Myriad Connect Division’, ‘Versy Division’ and ‘Legacy Division’. Segment reporting is prepared up to the level of
operating contribution because this is the key figure used for management purposes. Information on segment assets
and liabilities is not provided to the Board.
Monetary assets and liabilities in foreign currencies are translated at year-end rates and related unrealised gains and
losses are recognised in the income statement. Non-monetary assets and liabilities are translated at the exchange rate
prevailing at the date of transaction.
The net foreign exchange result is disclosed in the finance income or finance cost line.
Items included in the financial statements of each of the Group’s entities are measured using the currency of the
primary economic environment in which the entity operates (‘the functional currency’). The consolidated financial
statements are presented in US dollars (USD), due to the majority of trading contracts being denominated in USD. The
results and financial position of all group entities (none of which has the currency of a hyper-inflationary economy) that
have a functional currency different from the presentation currency are translated into the presentational currency as
follows:
• assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet;
• income and expenses for each income statement are translated at average exchange rates where these are a
reasonable approximation of the exchange rate at the underlying transaction date;
• equity items for each balance sheet presented are translated at the closing rate at the date of that balance sheet; and
• all resulting exchange differences are recognised in a separate component of equity.
Myriad Group AG
Annual Report 2015
39
2.4 Foreign currency translation
Transactions in foreign currencies are recorded at the rate of exchange at the date of the transaction. Any difference in
exchange rates between the original transaction date and the subsequent settlement date is recorded in the income
statement as a gain or loss.
On consolidation, exchange differences arising from translation of the net investment in the foreign operation, and of
borrowings and other currency instruments designated as hedges of such investments, are taken to other
comprehensive income. When a foreign operation is partially disposed of or sold, exchange differences that were
recorded in equity are recognised in the income statement as part of the gain or loss on sale.
2.5 Furniture and equipment
Furniture and equipment is stated at historical cost less accumulated depreciation and impairment losses. Cost
includes the original purchase price of the asset and the costs attributable to bringing the asset to its working
condition for its intended use. The depreciation is calculated on a straight-line basis over the following estimated
useful lives:
•
•
•
•
Furniture – 5 years
IT infrastructure – 3 years
Office refurbishment – 10 years, or the remainder of the lease term if shorter
Other equipment – 5 years
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.
Gains and losses on disposal are determined by comparing the proceeds with the carrying amount and are recognised
within other income and expenses in the income statement.
2.6 Intangible assets
(a) Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net
identifiable assets of the acquired subsidiary at the date of acquisition. For the purpose of impairment testing goodwill
is allocated to those cash generating units or groups of cash generating units that are expected to benefit from the
business combination in which the goodwill arose. Goodwill impairment reviews are undertaken annually, or more
frequently if events or changes in circumstances indicate potential impairment, and is carried at cost less accumulated
impairment losses. Impairment losses on goodwill are not reversed. Gains and losses on the disposal of an entity
include the carrying amount of goodwill relating to the entity sold.
(b) Other intangible assets
Software, intellectual property, customer base, and trademarks are shown at historical cost less accumulated
amortisation and impairment losses. Amortisation is calculated on a straight-line basis over the following estimated
useful lives:
•
•
•
•
Software – 5 years
Intellectual property – 2.5 to 7 years
Customer base – 5 years
Trademarks – 5 years
(c) Capitalised development costs
The Group expenses costs incurred in the preliminary project stage until the following criteria are met:
•
•
•
•
•
it is technically feasible to complete the product so that it will be available for use;
management intends to complete the product and use or sell it;
there is an ability to use or sell the product;
it can be demonstrated how the product will generate probable future economic benefits;
adequate technical, financial and other resources to complete the development and to use or sell the product are
available; and
• the expenditure attributable to the product during its development can be reliably measured.
Thereafter development costs are capitalised as intangible assets.
Costs that are capitalised as part of the software product include directly attributable software development employee
costs, directly attributable external consultancy costs and an appropriate portion of relevant overheads. Other
development expenditures that do not meet these criteria are recognised as an expense as incurred. Development
costs previously recognised as an expense are not recognised as an asset in a subsequent period.
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Myriad Group AG
Annual Report 2015
Strategic Report
Capitalised development costs are carried at the lower of unamortised cost and recoverable amount until the product
is released to customers, at which time capitalisation ceases and costs are amortised on a straight-line basis over the
estimated life of the product (three years).
2.7 Impairment of non-financial assets
Assets that have an indefinite useful life – for example, goodwill or capitalised development costs of products not yet
released to customers are not subject to amortisation and are tested annually for impairment or whenever indicators of
impairment exist. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the
amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of
an asset’s fair value less costs to sell or its value in use. In assessing value in use, the estimated future cash flows are
discounted to their present value based on the risks specific to the asset(s). Non-financial assets other than goodwill
that have suffered impairment are reviewed for possible reversal of the impairment at each reporting date.
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in
an active market. They are included in current assets, except for maturities greater than twelve months after the end of
the reporting period. These are classified as non-current assets. Loans and receivables are measured at amortised
cost using the effective interest rate method, less any impairment. Interest income is recognised by applying the
effective interest rate, except for short-term receivables when the recognition of interest would be immaterial. The
Group’s loans and receivables comprise certain long-term investments and other financial assets, trade and other
receivables, short-term investments and cash and cash equivalents.
2.10 Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is determined using the first in, first out
method and comprises direct materials and, where applicable, direct labour costs and overheads that have been
incurred in bringing inventory to its present location and condition. Net realisable value is the estimated selling price in
the ordinary course of business, less applicable variable selling expenses.
Where Inventory is identified as slow moving, obsolete or defective a provision is made to reduce the carrying value to
the net realisable value and the loss is recognised in the income statement.
2.11 Trade and other receivables
Trade receivables are initially recorded at fair value and subsequently held at amortised cost less any provision for
impairment.
Additions to the provision for doubtful debts are made based on the specific identification of accounts where collection
is considered to be at risk. Trade receivables are checked on a regular basis. As soon as there are indications, such as
feedback obtained from account managers and other personnel in direct contact with the customer, payment history of
the customer, updated credit rating reports and information available in the market, that there is a position at risk,
management decides on the necessary level of the provision.
Myriad Group AG
Annual Report 2015
41
2.9 Impairment of financial assets
The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset is
impaired. A financial asset is impaired and impairment losses are incurred only if there is objective evidence of
impairment as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and
that loss event (or events) has an impact on the estimated future cash flows of the financial asset that can be reliably
estimated. The amount of the loss is measured as the difference between the asset’s carrying amount and the present
value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the
financial asset’s original effective interest rate. The carrying amount is reduced and the amount of the loss is
recognised in the income statement. If, in a subsequent period, the amount of the impairment loss decreases and the
decrease can be related objectively to an event occurring after the impairment was recognised (such as an
improvement in the debtor’s credit rating), the reversal of the previously recognised impairment loss is recognised in
the income statement.
2.8 Financial assets
Financial assets are classified into specified categories dependent on the nature and purpose of the financial asset.
Classification is determined at the time of initial recognition. The Group currently classifies its financial assets as
‘loans and receivables’.
The provision for doubtful debts is reduced when the amount is recovered or written off.
2.12 Short-term investments
Short-term investments are primarily call deposits with maturities between 90 and 180 days at the time of investment
and are stated at nominal value, which approximates to their fair value. These are classified as loans and receivables.
2.13 Cash and cash equivalents
Cash and cash equivalents includes cash in hand, deposits at call with banks and other short-term highly liquid
investments with original maturities of three months or less.
2.14 Financial liabilities
The Group currently classifies its financial liabilities as ‘other financial liabilities’.
Other financial liabilities are initially measured at fair value and subsequently held at amortised cost using the effective
interest rate method, with interest expense recognised on an effective yield basis. The Group’s other financial liabilities
comprise loans and borrowings, and trade and other payables.
2.15 Trade payables
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business
from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less (or in the
normal operating cycle of the business if longer). If not, they are presented as non-current liabilities. Trade payables are
recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.
2.16 Loans and borrowings
Loans and borrowings are recognised initially at fair value, net of transaction costs incurred. Loans and borrowings are
subsequently carried at amortised cost; any difference between the proceeds (net of transaction costs) and the
redemption value is recognised in the income statement over the period of the borrowings using the effective interest
method.
Loans and borrowings are classified as current liabilities unless the Group has an unconditional right to defer
settlement of the liability for at least twelve months after the balance sheet date.
2.17 Employee benefits – pension obligations
Group pension funds in favour of employees are maintained in the United Kingdom (UK), the United States of America
(USA), China and France. They comply with the respective legislation in each country and are financially independent
of the Group. The pension funds are generally financed by employer and employee contributions. In the case of the UK,
USA, and China pension plans, which are accounted for as defined contribution plans, employer contributions paid or
due are recognised in the income statement as employee benefit expense when they are due. The Group has no further
payment obligations once the contributions have been paid.
The French defined benefit obligation consists of a retirement indemnity paid as a lump sum by the Company to the
employee when he/she retires. The benefit is prescribed by Collective Bargaining Agreements applicable to Myriad
France SAS, specifically the ‘SYNTEC’ National Collective Bargaining Agreement for both executives and nonexecutives. These benefits depend on the professional category, the reference salary, the seniority at retirement age
and the retirement type (at employee’s volition or employer’s volition). The retirement indemnity granted by the
Company must not be lower than the legal severance pay in case of voluntary retirement.
The liability recognised in the balance sheet in respect of defined benefit pension plans is the present value of the
defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit
obligation is calculated annually by independent actuaries using the projected unit credit method. The present value of
the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of
high quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have
terms to maturity approximating to the terms of the related pension obligation.
Actuarial gains and losses are recognised in other comprehensive income in the period that they arise.
Current service costs, past service costs (including curtailments), gains and losses on settlements and net interest are
recognised immediately in the income statement. Any difference between interest income and the actual return on
scheme assets is recognised in other comprehensive income.
42
Myriad Group AG
Annual Report 2015
Strategic Report
2.18 Current and deferred income tax
The tax benefit or expense for the period comprises current and deferred tax. Tax is recognised in the income
statement, except to the extent that it relates to items recognised in other comprehensive income or directly in equity.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the
balance sheet date in the countries where the Company and its subsidiaries operate and generate taxable income.
The Group incurs non-refundable withholding taxes on revenue earned in certain countries. In all of these situations the
Group has a contractual right to receive a gross payment. The payment made by the customer in these cases is
reduced by withholding taxes, typically in the range of 10-20%, which is paid by the customer to the local tax
authorities. IAS 12 only refers to withholding taxes in the context of dividends or distributions to the reporting entity. In
this situation it is appropriate to recognise revenue receivable in the income statement at an amount that includes (that
is, gross of) any withholding taxes, but excludes any other taxes not payable wholly on behalf of the recipient. The
Group treats these withholding tax deductions as an income tax paid on behalf of the Group due to its non-resident
status in the local jurisdiction and includes the deduction in the income tax charge.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax
assets against current tax liabilities and when the deferred income tax assets and liabilities relate to income tax levied
by the same taxation authority on either the same taxable entity or different taxable entities when there is an intention
to settle the balances on a net basis.
Deferred income tax is recognised, using the liability method, on temporary differences arising between the tax bases
of assets and liabilities and their carrying amounts in the consolidated financial statements. Deferred tax is determined
using tax rates (and laws) that have been enacted or substantively enacted by the balance sheet date and are expected
to apply when the related deferred income tax asset is realised or the deferred tax liability is settled. Deferred income
tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which
the temporary differences can be utilised.
2.19 Provisions
Provisions for onerous contracts, onerous leases and legal claims are recognised when the Group has a present legal
or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle
the obligation, and the amount can be reliably estimated. Provisions are recognised for onerous leases when it first
becomes apparent that the committed payments will not provide any future economic benefit. Provisions are measured
at the discounted present value of the best estimate of the expenditure required to settle the obligation at the balance
sheet date.
Where any Group company purchases the company’s equity share capital (treasury shares), the consideration paid,
including any directly attributable incremental costs (net of income taxes) is deducted from equity attributable to the
company’s equity holders until the shares are cancelled or reissued. Where such ordinary shares are subsequently
reissued, any consideration received, net of any directly attributable incremental transaction costs and the related
income tax effects, is included in equity attributable to the company’s equity holders.
2.21 Share-based payments
The Group operates equity-settled, share-based compensation plans, under which the entity receives services from
employees (including Senior Executives and members of the Board of Directors) as consideration for equity
instruments (options) of the Group.
The fair value of the employee services received in exchange for the grant of options is recognised as an expense. The
total amount to be expensed is determined by reference to the fair value of the options granted. The fair value of the
options is measured initially at grant date and is expensed on a straight-line basis over the period during which the
employees become unconditionally entitled to the options, known as the vesting period. The fair value of options is
measured using the Black-Scholes share option pricing model (in prior years, a binomial model), taking into account
the terms and conditions upon which the options were granted. The amount recognised as expense is adjusted to
reflect the actual number of stock options that are expected to vest.
Myriad Group AG
Annual Report 2015
43
2.20 Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new ordinary shares or
options are shown in equity as a deduction, net of tax, from the proceeds.
2.22 Government grants
Grants from government are recognised at their fair value where there is a reasonable assurance that the grant will be
received and the Group will comply with all attached conditions. Government grants relating to costs are deferred and
recognised in the income statement over the period necessary to match them with the costs that they are intended to
compensate. Government grants relating to capitalised research and development costs or property, plant and
equipment are included in non-current liabilities as deferred government grants and are credited to the income
statement on a straight-line basis over the expected lives of the related assets.
Government grants for expenses or losses already incurred with no future related costs are recognised in the income
statement in the period in which it becomes receivable.
2.23 Leases
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as
operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged
to the income statement on a straight-line basis over the period of the lease.
The Group leases certain property and equipment and software. Lease arrangements where the Group has
substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at
the lease’s commencement at the lower of the fair value of the asset and the present value of the minimum lease
payments. Each lease payment is allocated between the liability and finance charges. The corresponding rental
obligations, net of finance charges, are included in other long-term payables. The interest element of the finance cost
is charged to the income statement over the lease period so as to produce a constant periodic rate of interest on the
remaining balance of the liability for each period. The property and equipment and software acquired under finance
leases is depreciated/amortised over the shorter of the useful life of the asset and the lease term.
2.24 Revenue recognition
The Group recognises revenue when all of the following conditions are satisfied: persuasive evidence of an agreement
exists, delivery has occurred, the fee is fixed or determinable, and collection is deemed probable.
a) Licence revenue
The general revenue recognition criteria set out above are applied as follows with respect to licence revenues:
• Persuasive evidence of an agreement: Myriad considers signed contracts and purchase orders as adequate
documents that provide persuasive evidence of the existence of an agreement. If standard practice includes use of
signed contracts, then persuasive evidence is provided only by a contract signed by both parties. If it is a client’s
business practice to use only purchase orders, then evidence must specify governing terms and conditions.
• Delivery must have occurred: Myriad considers the delivery to have occurred upon the transfer of the product master
or first copy, in the case of products sold in the Device Solutions Division, or upon formal customer acceptance, in
the case of products sold in the Mobiles Services Division. Any contracts that provide for the delivery of future
software, other than unspecified upgrades or enhancements, are additional elements and are initially recorded as
deferred revenue. After delivery, if uncertainty exists about customer acceptance of the software, recognition of
licence revenue is deferred until acceptance occurs.
• Fees must be fixed or determinable: In the Device Solutions Division, Myriad considers a fee to be fixed or
determinable if the amount of the unit fee and number of copies is defined in the contractual agreement with the
customer. In the Mobile Services Division, the fee is considered to be fixed when the capacity level and related price
has been agreed.
• Collection must be probable: Myriad has a close relationship with its customers and carefully monitors their
creditworthiness. Collection is deemed probable if Myriad expects that the customer will be able to pay amounts
under the arrangement as payments become due. If Myriad determines that collection is not probable, revenue is
deferred and recognised upon cash collection.
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Myriad Group AG
Annual Report 2015
Strategic Report
Standard terms of the licence agreements for the Device Solutions Division require the licensee to document the total
number of shipments of products incorporating Myriad’s technology and report this data to Myriad on a quarterly
basis.
Licence agreements pursuant to which customers commit to purchase Myriad’s software for a specified period of time
but that do not specify minimum purchasing requirements are referred to as duration contracts. Duration contracts
also include a fixed fee, which is based on the number of shipments. Under duration contracts, customers report the
number of devices shipped incorporating Myriad software on a quarterly basis, and are invoiced for licence fees
accordingly. Revenue is recognised under such contracts based upon the quarterly royalty reports.
In the case of licence agreements which provide for a minimum committed volume of units over a pre-defined period of
time, whereby any amount not consumed by the customer is non-refundable, and in the case of licence agreements
which provide to the customer an unlimited, perpetual licence to ship devices with Myriad’s software, the Group
recognises revenues upon execution of the contract.
Where Myriad provides a messaging solution via the USSD network of a partner mobile operator, it earns a percentage
share of the revenue generated for that operator. Myriad recognises revenue in the month that services are delivered.
Myriad Connect Division
Standard terms of the licence agreements for the Mobile Services Division call for the sale of a licence which permits a
server to manage up to a specified number of Unstructured Supplementary Service Data (USSD) messages per second,
known as capacity-based licences. These licences are sold to mobile operators as part of a turnkey solution, which
includes installation and other services. Myriad recognises revenue from the sale of its capacity-based software
licences upon formal acceptance of the full solution by the customer. Installation and other services are accounted for
separately.
Legacy Messaging Division
During 2014 Myriad received user fees in relation to its Legacy messaging products. These were ceased in H1 2014.
In addition, Myriad recognises all of the costs related to the sale of such licences, including the cost of licences and
selling expenses, at the time revenue is recognised.
b) Service revenue
Service revenue consists of non-recurring engineering, installation, training, consulting, and technical support
services. Revenue on fixed-price projects, for which Myriad’s engineering services contracts typically are incurred, is
recognised based on an estimated percentage of completion as work progresses. Where revenue is recognised in
advance of amounts being invoiced the difference is shown as accrued income in trade and other receivables.
Estimated losses on fixed-price service arrangements are recognised immediately when it becomes apparent a loss
will be incurred. After such a determination, it is possible that actual losses realised will be greater than the estimate
previously recorded. These differences could be material.
Revenue from training and consulting service elements is generally recognised as the services are performed.
Maintenance contracts include second level support to the customer and there is generally a time and response
commitment made to the customer to resolve software issues. Maintenance revenue is recognised on a straight-line
basis over the period of the contracts.
Myriad Group AG
Annual Report 2015
45
3 Critical accounting estimates and judgements
Estimates and judgements are continually evaluated and are based on historical experience and other factors,
including expectations of future events that are believed to be reasonable under the circumstances.
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates may not equal
the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment
to the carrying amounts of assets and liabilities within the next financial year are addressed below.
a) Capitalisation of development costs
Once the criteria set out in note 2.6(c) have been met the Group capitalises related development costs until such time
as the customer product incorporating the software is commercialised, at which time capitalisation ceases. However,
there can be no assurance that such products will complete the development phase or will be commercialised or that
market conditions will not change in the future requiring a revision of management’s assessment of such future cash
flows which could lead to additional amortisation or impairment charges. The Group has capitalised development
costs with a net book value of USD 184,000 at 31 December, 2015, as disclosed in note 15.
b) Estimated useful lives of intangible assets
Intangible assets are amortised over estimated useful life of between 2.5 and 7 years. Estimated useful life is based on
the Group’s operating experience. As the Group continues to evolve, it is possible that product life cycles may shorten
which could have the impact of shortening the amortisation period in the future and could increase amortisation
accordingly. The net carrying values of the Group’s intangible assets are disclosed in note 15.
c) Goodwill impairment
Management performs an annual assessment of goodwill to assess whether there is objective evidence that it is
impaired. The impairment review requires the determination of appropriate future cash flows, which requires
management judgement. The key assumptions in relation to the cash flows are as discussed within note 15.
These assumptions, and the judgements of management that are based on them, are subject to change as new
information becomes available. Changes in economic conditions and government policy can also affect the rate used
to discount future cash flow estimates. The discount rate applied is reviewed annually. Changes in assumptions could
affect the carrying amounts of assets and impairment charges and reversals will affect income. Further details are
disclosed within 15.
4 Segment information
During the year there has been a change in the results that are regularly reviewed by the Board. As a result
management have identified one additional operating segment and two additional reportable segments in accordance
with IFRS 8.
The segments previously presented were the Device Solutions Division and the Mobile Services Division which was an
aggregation of the Myriad Connect and Social Messaging segments. The Social Messaging segment has now been
split between Versy and Legacy Messaging to enable decision makers to better monitor changes in the business.
Following a decline in the North America Operator business and the growth of the Versy OTT social platform,
management no longer considered the characteristics of Myriad Connect and Social Messaging to meet the critera of
IFRS 8 to be aggregated into one single reportable segment.
Management has determined that the operating segments, based on the reports reviewed by the Board of Directors
(the Group’s chief operating decision maker) that are used to make strategic decisions, are as follows:
a. Device Solutions Division: includes activities of the embedded software platforms and middleware including
browser, messaging and Jbed Java Virtual Machine clients and related services.
b. Myriad Connect Division: the Group provides mobile operators with network service platforms and software for
mass market phones. This includes the extensive service portfolio in the Unstructured Supplementary Service Data
(USSD) business, and the Value Added Services business. The Value Added Services includes the Myriad Updates
service, provided over USSD through our collaboration with Facebook and Twitter enables users without data plans
to connect to the social networks and chat services they want to reach in a simple and affordable way.
c. Versy Division: Versy is a social messaging application focused in Latin America and enables consumers to connect
to friends and family for free across feature phones as well as smartphones in a unique, natural chat experience not
available from any other social mobile messaging service.
d. Legacy Messaging Division: the Group provided a social messaging solution in partnership with network operators.
This includes the North America operator business acquired with Synchronica plc in 2012.
46
Myriad Group AG
Annual Report 2015
Strategic Report
Management assesses the performance of the operating segments based on the operating contribution. This measure
includes the operating expenses that are directly or reasonably attributable to the reporting segments.
Unallocated expenses mainly comprise office-related expenses and other administrative or corporate overheads that
cannot be directly attributable to the operating segments.
The Group has not disclosed segmental information in respect of segment assets as this information is not provided to
the chief operating decision maker.
Segment information is as follows:
2015
Myriad
Connect
Versy
Legacy
Total
10,113
2,815
5,192
8,379
–
–
366
431
15,671
11,625
12,928
13,571
797
27,296
7,554
4,385
454
631
Device
Myriad
Connect
Versy
Legacy
Total
Licence revenue
Service revenue
14,977
4,641
3,460
8,574
–
–
3,503
5,026
21,940
18,241
Total revenue
19,618
12,034
–
8,529
40,181
Operating contribution
13,364
3,148
6,663
17,144
Licence revenue
Service revenue
Total revenue
Operating contribution
2014
USD’000
–
(11,762)
(6,031)
2015
USD’000
2014
631
(356)
(2,441)
(47,498)
(2,133)
(8,925)
(4,760)
–
–
–
–
–
–
–
(2,217)
17,144
(979)
(2,826)
–
(343)
(8,328)
(1,298)
9,603
(5,886)
(1,000)
2,527
1,156
1,371
(2,519)
571
(67,699)
9,193
The following table summarises revenue by geographic region based on customers’ location. Countries are grouped
into operating regions, except where they exceed 10% of total revenue in either the current or the prior year.
EMEA
Americas
United States of America
Other Americas
Asia Pacific
Korea
Other Asia Pacific
Total
2015
% share
2014
% share
9,682
35.5%
10,854
27.0%
7,356
5,014
26.9%
18.4%
18,468
5,191
46.0%
12.9%
1,772
3,472
6.5%
12.7%
2,951
2,717
7.3%
6.8%
27,296
100.0%
40,181
100.0%
Of the above revenue, significant amounts from individual customers in 2015 were the Orange Group USD 8,156,000
(2014: USD 7,187,000) and Microsoft USD 5,400,000 (2014: USD 250,000).
Myriad Group AG
Annual Report 2015
47
Total operating contribution from the reportable segments
Depreciation
Amortisation
Impairment
Restructuring costs
Unallocated expenses
Oracle settlement
Legal fees on Oracle settlement
Motorola settlement
Exclusivity fees settlement
Deferred consideration settlement
MobiWire liquidator settlement
French social plan costs not reimbursed by Sagem Wireless
Net finance (expense) income
USD’000
Device
USD’000
5 Restructuring and integration costs
Restructuring and integration costs are allocated as follows:
2015
USD’000
2014
Cost of revenue (see note 6)
Research and development
Sales and marketing (see note 7)
General and administrative (see note 8)
113
457
415
1,148
143
46
642
(488)
Total restructuring and integration costs
2,133
343
Management has continued to reorganise and restructure the Group as part of an ongoing cost rationalisation
exercise. This has impacted all areas of the business with total costs incurred of USD 2,133,000 (2014: USD 343,000).
The 2015 charge includes personnel costs of USD 1,939,000 (2014: USD 1,025,000). The 2014 charge included a rent
provision release of USD 1,059,000 resulting from the early exit from offices in Montreal.
6 Cost of revenue
Cost of revenue includes amortisation of intangible assets and allocated restructuring costs as follows:
2015
USD’000
Cost of licence revenue
Oracle settlement
Cost of service revenue
Amortisation of intangible assets (see note 15)
Restructuring and integration costs (see note 5)
Cost of revenue
2014
4,494
–
6,236
2,441
113
4,358
(9,603)
8,138
2,826
143
13,284
5,862
During 2014 the Group reached an amicable agreement with Oracle America Inc, resolving the litigation proceedings
brought by both parties. This settlement resulted in a credit to cost of revenue of USD 9,603,000. The Group had
incurred legal costs in relation to this case of USD 5,886,000 (see note 8).
7 Sales and marketing costs
Included within sales and marketing costs are the following amounts:
2015
USD’000
2014
Sales and marketing
Exclusivity fees settlement
11,136
–
415
6,028
(2,527)
642
Total sales and marketing costs
11,551
4,143
In 2014 the Group entered into a new commercial agreement with network operators in certain geographical territories.
As part of this agreement liabilities arising from prior guarantees of product exclusivity were extinguished.
8 General and administrative costs
Included within general and administrative costs are the following amounts:
2015
USD’000
General and administrative costs
Depreciation (see note 14)
Legal fees on Oracle settlement (see note 6)
Total general and administrative costs
48
Myriad Group AG
Annual Report 2015
2014
5,657
4,760
356
1,148
372
–
6,204
1,298
979
(488)
431
5,886
12,293
14,310
USD’000
2015
2014
Other income:
Income from government grants
Profit on sale of assets
MobiWire liquidator settlement
Deferred consideration settlement
Other income
592
–
–
–
32
2,499
94
1,371
1,156
–
Total other income
624
5,120
Other expenses:
French social plan costs not reimbursed by Sagem Wireless
Motorola settlement
Other expenses
–
–
–
(2,519)
(1,000)
(3)
Total other expenses
–
(3,522)
Income from government grants
During 2014 Synchronica Inc received certification for IQ grants for the 12 months to 31 December 2013 (USD
1,022,000) and the period 17 April, 2012 to 31 December, 2012 (USD 1,001,000). Synchronica Inc was eligible for grants
from the Quebec provincial government, through providing jobs for people engaged in qualifying research and
development projects. Grant income was accrued for qualifying roles maintained over a financial year. The grant
income was not linked to any future contingent events, income was recorded in the financial statements once there
was reasonable assurance that the income would be received and that the Company has satisfied that it has complied
with all attached conditions. In the case of grants received from Investment Quebec (IQ), this was deemed to be the
case once the grant has been audited and certification of the respective IQ credit was received by the Company.
Strategic Report
9 Other income and expense
Myriad France SAS is eligible to receive R&D tax credits and under the current regime these credits are payable to the
company after three years. Income is recognised once the claim has been submitted and future receipt becomes
reasonably certain. During 2015 USD 62,000 of grant income was recognized in respect of the 2014 claim (2014: USD
379,000 in respect of the 2013 claim) (see note 21).
Synchronica Limited is eligible to receive R&D tax credits, under the R&D expenditure credit scheme. Income is
recognised once the claim has been submitted and future receipt becomes reasonably certain. During 2015 USD
344,000 of grant income was recognized in respect of the 2014 claim and USD 158,000 in respect of the 2013 claim.
(2014: nil).
Deferred consideration
During 2014 a settlement was reached with Nokia whereby contractual payments, arising from Synchronica Limited’s
acquisition of Nokia’s North America Network Operator Business, up to December 2016 totalling USD 11,231,000 were
replaced by an immediate one-off payment of USD 8,500,000. The gain of USD 1,156,000 represents the difference
between the discounted liability at the date of this settlement and the amount paid.
French liquidator settlement
During 2014 Myriad France SAS received USD 1,371,000 (EUR 1,100,000) from the liquidator of MobiWire SA. No
receivable had been previously recognised due to the uncertainty of receipt of this amount.
Sagem termination agreement
Following the termination of the Sagem Wireless contracts, Myriad embarked on restructuring the Myriad France SAS
business and has incurred costs relating to the ongoing employment and establishment costs for a number of staff.
This was substantially completed in 2011. During 2014 further provisions and costs were incurred of USD 182,000
relating to amounts required to complete this restructuring. Under the terms of the settlement agreement from 1
November, 2010 Sagem Wireless was committed to provide employment for these people either directly or within the
wider SAFRAN group of companies, and to reimburse the establishment costs, or pay redundancy costs if
redeployment is not possible.
Myriad Group AG
Annual Report 2015
49
Motorola settlement
During 2014 the Group reached a settlement with Motorola Mobility relating to proceedings brought in June 2011
against the Group for loss of profits in respect of three alleged defects affecting browser software. The settlement
resulted in an additional charge of USD 1,000,000 in 2014.
9 Other income and expense continued
This agreement was also signed by Sagem Telecommunications and FCPR Sofinnova Capital VI, represented by
Sofinnova Partners, in support of Sagem Wireless as shareholders. Sagem Wireless (renamed MobiWire) filed for
insolvency in the French courts on 31 March, 2011. During 2014 Myriad was awarded USD 1,371,000 (EUR 1,100,000)
from the liquidator. The Board and Management has determined that it will not further pursue this matter by instituting
a claim against the Sagem Wireless shareholders in the court of first instance.
In addition, Myriad France SAS, MobiWire and SAGEM Telecommunications are currently contesting a writ from 45
former employees instituted on 27 July, 2011 in the labour court of Pontoise for additional compensation in connection
with the alleged nullity of the Social Plan of Myriad France SAS. This follows the Sagem Termination agreement
completed in 2010. A full hearing took place on 8 July 2014 and on 10 October 2014 the judge issued her decision. She
determined that the 45 employees were entitled to an additional payment (excluding social taxes) of approximately
€1,486,672. Myriad has appealed the judgement and the hearing for such appeal is scheduled for 7 March 2017.
Appropriate provisions have been made.
10 Employee compensation and benefits
(a) Personnel expenses
Personnel expenses included in cost of revenue as well as in other operating expenses consisted of the following:
Employee compensation and benefits
2015
USD’000
2014
Salaries and wages
Social taxes
Pension cost (see note 23)
Capitalised development costs (see note 15)
Other personnel-related costs
14,870
2,812
366
(580)
446
4,760
14,391
3,097
339
(642)
182
1,298
Total expenses
22,674
18,665
Remuneration for Senior Management and the Board of Directors is disclosed in note 30.
(b) Stock option plans
All employees of the Group are eligible to receive stock options.
The stock options are granted at regular Board meetings at an exercise price equivalent to the stock market closure
price of the Company shares on the grant date, or at the nominal value of the Company share. All options grant
employees the right to purchase one Company share per option and are exercisable after the vesting conditions are
satisfied. The vesting of stock options is dependent on continued employment until the vest date. The Compensation
and Nomination Committee reviews and makes recommendations for the grant of employee options, which are then
approved by the Board of Directors. In general, the contractual life of the options is 10 years from the grant date.
All outstanding options are covered by the conditional share capital.
The following table details the movements of outstanding employee stock options from 1 January until 31 December:
2015
No.
‘000
2014
Weighted
average
exercise
price CHF
At 1 January
Granted
Exercised
Lapsed
At 31 December
Thereof vested and exercisable
4,714
5,311
(241)
(1,429)
8,355
3,850
Weighted average fair value of options granted
Weighted average exercise price of options exercised
Weighted average exercise price of options lapsed
Weighted average contractual life of share options outstanding (years)
Exercise price for options outstanding at year-end
CHF 1.74
CHF 1.46
CHF4.81
6.72
CHF 0.10 – 18.60
50
Myriad Group AG
Annual Report 2015
1.66
4.96
1.46
4.81
3.18
1.57
No.
2,056
3,145
(295)
(192)
4,714
700
Weighted
average
exercise
price CHF
1.88
1.52
1.67
3.93
1.66
2.00
CHF 0.67
CHF 1.67
CHF 3.93
9.11
CHF 0.10 – 18.60
Strategic Report
The following tables summarise the employee stock options outstanding as at 31 December 2015 and 2014,
respectively:
Options outstanding
at 31 December 2015 (‘000)
Exercise
price (CHF)
Expiry dates
2016
2017
29
0.10
76
1.36
27
2,746
1.41
408
40
1.56
578
1.62
73
1.64
751
1.80
2022
2023
2024
49
439
1,899
40
431
147
73
26
44
681
3.95
32
4.06
32
70
4.10
70
30
4.31
3,728
5.00
654
1
5.70
1
6.00
1
18.60
8,355
Options outstanding
at 31 December 2014 (‘000)
160
30
40
1
1,577
Exercise
price (CHF)
3,074
439
44
917
2,074
3,304
2023
2024
Expiry dates
2016
2021
20
2022
29
0.10
154
1.36
2,890
1.41
40
1.56
40
603
1.62
603
9
154
2,890
1.64
751
1.80
120
55
4.06
55
70
4.10
70
44
1
5.70
1
1
18.60
1
2
20
53
707
1,504
3,135
At 31 December, 2015, non-executive members of the Board of Directors held 193,643 employee stock options at
exercise prices ranging from CHF 1.41 to CHF 5.00 (2014: 143,643 employee stock options at exercise prices ranging
from CHF 1.41 to CHF 1.80).
At 31 December, 2015, Executive Management members held 4,853,332 employee stock options at exercise prices
ranging from CHF 1.36 to CHF 5.00 per share (2014: 3,475,178 employee stock options at exercise prices ranging from
CHF 0.10 to CHF 1.80 per share).
Myriad Group AG
Annual Report 2015
51
120
4,714
160
40
2025
29
10 Employee compensation and benefits continued
The fair value of employee stock options granted is estimated at the date of grant using the Black-Scholes share option
pricing model, taking into account the terms and conditions upon which the options were granted. Inputs to the model
are as follows:
2015
2014
Dividend yield
Expected volatility
Risk-free interest rate
Expected life of option
Exercise price
0.00%
45.00% – 45.33%
0.01%
4.00 years
CHF 3.95 – CHF 6.00
0.00%
39.16% – 45.36%
0.01% – 0.77%
4.00 to 6.50 years
CHF 0.1 – CHF 4.1
The expected volatility is based on the historical volatility of the Myriad Group calculated as the annualised standard
error of its daily log returns, which may not necessarily be the actual outcome.
The expense for employee services received is recognised over the vesting period. The amount of stock option expense
recognised in 2015 was USD 4,760,000 (2014: USD 1,298,000).
11 Finance income and costs
2015
2014
Other finance income
Foreign exchange gains, net
5
–
45
1,918
Finance income
5
1,963
USD’000
Interest expense
Other finance costs
Unwind of discount on deferred consideration
Foreign exchange losses, net
(28)
(110)
–
(2,084)
(78)
(86)
(1,228)
–
Finance costs
(2,222)
(1,392)
Net finance (costs) income
(2,217)
571
On 29 July, 2011 Synchronica Limited (formerly Synchronica plc) acquired Nokia’s North America Network Operator
business in a transaction which included USD 21,160,000 of deferred consideration. During 2014 contractual amounts
were settled in full, see note 9.
12 Income tax
2015
2014
Current income tax:
Current tax on profits for the year
Adjustment in respect of prior years
(899)
275
(875)
(195)
Total current income tax expense
(624)
(1,070)
USD’000
Deferred income tax:
Origination and reversal of temporary differences
Total deferred income tax credit (expense)
Total income tax expense
52
Myriad Group AG
Annual Report 2015
411
411
(213)
(12)
(12)
(1,082)
USD’000
2015
2014
Income tax rate of Myriad Group AG
(67,699)
20.85%
Tax benefit (expense) at Myriad Group AG income tax rate
Expenses not deductible for tax purposes
Utilisation of previously unrecognised tax losses
Non taxable income
Movement in unrecognised deferred tax assets
De-recognition of deferred tax asset
Effect of R&D tax credits
Effect of different tax rates in foreign jurisdictions
Non-refundable withholding taxes1
Adjustment in respect of prior years
Other
14,115
(10,047)
878
–
(5,040)
(88)
(114)
267
(467)
275
8
(1,917)
(248)
3,731
3,835
(5,241)
(37)
–
(373)
(623)
(195)
(14)
(213)
(1,082)
9,193
20.85%
1. Non-refundable withholding taxes (see accounting policy note 2.18).
13 Earnings per share
Earnings per share is calculated as follows:
2015
Net (loss) profit for the year attributable to owners of the parent (USD’000)
Weighted average number of ordinary shares outstanding during the year (‘000)
Aggregate number of equivalent ordinary shares for purpose of calculating the basic profit per share (‘000)
Aggregate number of equivalent ordinary shares for purpose of calculating the diluted profit per share (‘000)
Profit per share (USD):
– basic
– diluted
Restated
2014
(67,912)
108,030
108,268
108,268
8,111
95,077
95,191
97,183
(0.63)
(0.63)
0.09
0.08
Diluted earnings per share during 2014 is calculated by adjusting the weighted average number of ordinary shares
outstanding to assume conversion of all dilutive potential ordinary shares. The Company has one category of dilutive
potential ordinary shares: share options. For the share options, a calculation is done to determine the number of shares
that could have been acquired at fair value (determined as the average annual market share price of the Company’s
shares) based on the monetary value of the subscription rights attached to outstanding share options. The number of
shares calculated as above is compared with the number of shares that would have been issued assuming the exercise
of the share options.
The comparative calculation of earnings per share has been restated as a result of the share placing in 2015.
53
Due to the fact the Group incurred net losses during 2015, the potential ordinary shares from options granted to
employees did not have any dilutive effect on the Group’s loss per share.
Myriad Group AG
Annual Report 2015
Income tax expense
Strategic Report
The Group has operations mainly in Switzerland, France, USA, China, the United Kingdom and branch offices dispersed
throughout Europe and Asia that have differing tax laws and rates. Consequently, the effective tax rate on consolidated
income may vary from year to year, according to the source of earnings. The following table reconciles the profit before
income tax per the income statement to the income tax benefit, computed using the applicable tax rate of the
headquarters, Zurich (Switzerland):
14 Furniture and equipment
Furniture
USD’000
IT
infrastructure
Office
refurbishing
Other
equipment
Total
Cost
At 1 January 2014
Additions
Disposals
Translation adjustments
580
2
(145)
(11)
5,777
76
(4,084)
(295)
956
114
(450)
(23)
1,200
–
(815)
(45)
8,513
192
(5,494)
(374)
At 31 December 2014
426
1,474
597
340
2,837
306
(44)
(278)
–
(150)
(5)
–
(8)
(70)
Additions
Disposals
15
(21)
(14)
321
(223)
(367)
At 31 December 2015
406
1,458
442
262
2,568
Accumulated depreciation
At 1 January 2014
Charge for year
Disposals
546
23
(132)
(20)
4,936
671
(4,084)
(286)
802
127
(449)
(21)
1,004
158
(788)
(38)
7,288
979
(5,453)
(365)
At 31 December 2014
Charge for year
Disposals
417
8
(21)
(14)
1,237
246
(43)
(279)
459
98
(150)
(3)
336
4
(7)
(71)
2,449
356
(221)
(367)
At 31 December 2015
390
1,161
404
262
2,217
34
841
154
196
1,225
Net book value at
1 January 2014
Net book value at 31 December 2014
9
237
138
4
388
Net book value at 31 December 2015
16
297
38
–
351
IT infrastructure includes the following amounts where the Group is a lessee under a finance lease:
2015
USD’000
2014
Cost – capitalised finance leases
Accumulated depreciation
–
–
390
(260)
Net book value
–
130
Of the additions in 2015 USD nil (2014: USD nil) were funded through finance leases.
The Group did not have any capital commitments relating to the acquisition of furniture and equipment, other than the
amounts recognised as liabilities in the balance sheet, as at 31 December, 2015.
The fire insurance value of furniture and equipment at 31 December, 2015 amounts to USD 2,568,000 (2014: USD
2,837,000).
Depreciation expense is allocated to ‘general and administrative costs’, see note 8.
54
Myriad Group AG
Annual Report 2015
Customer
base
Capitalised
development
costs
Goodwill
Cost
At 1 January 2014
Additions
62,258
–
(2,207)
4,188
–
(2)
25,490
–
(164)
8,947
–
(35)
22,472
1,566
(2,176)
123,355
1,566
(4,584)
At 31 December 2014
Additions
De-recognition
60,051
–
(44,147)
(1,622)
4,186
–
–
(103)
25,326
–
–
(676)
8,912
–
(3,491)
(1,118)
21,862
580
(7,592)
(234)
120,337
580
(55,230)
(3,753)
At 31 December 2015
14,282
4,083
24,650
4,303
14,616
61,934
3,444
413
1
25,490
–
(164)
6,583
660
(35)
18,623
1,753
(1,969)
63,766
2,826
(3,340)
8,453
–
44,147
(44,147)
(862)
3,858
263
–
–
(103)
25,326
–
–
–
(676)
7,208
460
1,244
(3,491)
(1,118)
18,407
1,718
2,107
(7,592)
(208)
63,252
2,441
47,498
(55,230)
(2,967)
At 31 December 2014
Charge for the year
Impairment
De-recognition
At 31 December 2015
9,626
–
(1,173)
Total
7,591
4,018
24,650
4,303
14,432
54,994
Net book values at 1 January 2014
52,632
744
–
2,364
3,849
59,589
Net book values at 31 December 2014
51,598
328
–
1,704
3,455
57,085
Net book values at 31 December 2015
6,691
65
–
–
184
6,940
USD’000
Accumulated amortisation
At 1 January 2014
Charge for year
Software
Intellectual
property
Strategic Report
15 Intangible assets
Internally-generated intangible assets at 31 December, 2015 solely include capitalised development costs USD 184,000
(2014: USD 3,455,000). The addition in 2015 includes USD nil of external consultancy costs (2014: 924,000).
Software includes the following amounts where the Group is a lessee under a finance lease:
USD’000
2015
2014
–
–
198
(82)
Net book value
–
116
Amortisation expense is allocated to ‘cost of revenue’, see note 6.
Impairment of intangible assets is disclosed within total cost of revenue in the Consolidated income statement.
Myriad Group AG
Annual Report 2015
55
Cost – capitalised finance leases
Accumulated amortisation
15 Intangible assets continued
Impairment test
The group of intangible assets allocated to each CGU, including goodwill, is tested for impairment on at least an annual
basis or when there are any indicators of impairment. The recoverable amount has been determined based upon a
value-in-use calculation. The value-in-use is determined based on future discounted cash flows. For each CGU the
recoverable amount is higher than the carrying value.
During the year there has been a change in the results that are regularly reviewed by the Board. As a result
management have identified an additional component which is considered to meet the definition of an operating
segment in accordance with IFRS 8. The Social Messaging Division has been spilt into Versy and Legacy Messaging,
with the intangible assets acquired on the acquisition of Synchronica in 2012 being allocated to Versy.
As a basis for the calculation, the Board-approved budget for 2016 is used for year one and management’s five-year
strategic plan is used for years two to five. Subsequent years are included in the calculation using a perpetual annuity.
Key assumptions include the growth of future revenue streams following product development activity; the amount
and timing of projected future cash flows; future tax rate and the level of commercial expense required to renew
products and keep up with existing competitors or new market entrants. The projections and growth rates applied are
based on historic performance and also on judgments made by management as to the probable economic
development of the relevant segments.
IAS 36 requires the discount rate for value in use calculations to be calculated on a pre-tax basis. The pre-tax discount
rates are derived from the Group’s post tax weighted average cost of capital and adjusted for the specific risks of the
different CGU’s associated cash flow projections.
The following parameters have been used for the calculations:
2015
Discount rate Discount rate
(pre-tax)
(post-tax)
Myriad Connect
17.81%
14.10%
2014
Terminal
growth rate
(residual Discount rate Discount rate
value)
(pre-tax)
(post-tax)
2.00%
16.93%
13.40%
Terminal
growth rate
(residual
value)
3.00%
The terminal growth rate of 2.00% reflects management’s latest expectations.
Sensitivity analysis of recoverable amounts related to the Myriad Connect CGU
A reduction in anticipated future revenue growth to be consistent with the budget for 2016 would result in an
impairment charge of USD 4,800,000.
Impairment charges
2015
Management has reviewed latest market conditions in assessing the value of its intangible assets. Impairment charges
have arisen due to the technological evolution of Versy during FY 2015. The Versy product has been launched and will
continue to evolve based on the realisation that a social messaging application based around content, rather than a
pure chat application, could build a more valuable engaged user base. To deliver and respond to the accelerating
transition to smartphones in our target markets, Versy needed to focus more on smartphone architecture that would be
able to support the discovery of richer content streams in video and audio. The combination of an increased strategic
focus on a smartphone-only application and further analysis of the expected route to monetisation, means Myriad no
longer expects to significantly monetise through the technology assets and network operator relationships acquired
with the Synchronica transaction. Impairments have also been made against capitalised development costs
associated with the Device division following the downturn in both revenue and profitability in 2015.
56
Myriad Group AG
Annual Report 2015
Strategic Report
2014
Management reviewed the latest market conditions and considered the appropriate parameters to be applied in the
value in use calculation. The future discounted cash flows support the carrying values of goodwill, intellectual property
and capitalised development costs associated with the Social Messaging and Myriad Connect CGU’s. No impairments
have been made in the year.
Analysis of impairment charge:
USD’000
2015
2014
Device
625
–
Total Device
625
–
44,147
–
198
–
Customer Relationships
1,244
–
Total Legacy Messaging
45,589
–
1,284
–
1,284
–
47,498
–
Legacy Messaging
Goodwill
Total Versy
Total
Versy
Goodwill has been allocated to the Group’s CGU's as follows:
2015
2014
Myriad Connect
Versy
6,691
–
7,451
44,147
Total amount of goodwill
6,691
51,598
USD’000
Amounts derecognised relate to those fully amortised or impaired intangible assets that the Group does not expect to
derive any future benefit from.
USD’000
2015
2014
Loans and receivables
Security deposits
Long-term loan
208
3
222
3
Total
211
225
Loans and receivables include rent deposits for offices. These deposits bear interest at current market rates.
The Group has a 9.58% (2014: 9.58%) interest in Eflow Inc, Japan. The fair value of this interest is considered to
be USD nil (2014: USD nil).
Myriad Group AG
Annual Report 2015
57
16 Long-term investments and other financial assets
17 Inventories
USD’000
2015
2014
Inventories
136
72
Total
136
72
The cost of inventories recognised as an expense and included in ‘cost of service revenue’ amounted to USD 519,000
(2014: USD 451,000).
18 Trade and other receivables
2015
USD’000
2014
Trade receivables
Less provisions for impairment
5,507
(1,144)
6,075
(907)
Net trade receivables
VAT receivables
Withholding tax receivables
Other receivables
Accrued income
Other prepaid expenses
4,363
561
15
1,586
5,096
577
5,168
764
101
1,263
5,755
462
12,198
13,513
Total
Other receivables includes USD 1,104,000 (2014: 1,230,000) of grants receivable from the French government (see note
21) and USD 381,000 (2014: nil) due from the UK government as part of the R&D expenditure credit scheme.
An impairment review has been undertaken at the year end to assess whether the carrying amount of financial assets
is deemed recoverable. The primary credit risk relates to customers which have amounts due outside of their credit
period.
Trade receivables past due, but not impaired and ageing analysis of amounts impaired:
2015
Gross
USD’000
Provision
2014
Net
Gross
Provision
Net
–
2,666
Not yet due
Amounts past due:
1-30 days overdue
31–60 days overdue
More than 120 days overdue
2,527
(134)
2,393
2,666
953
532
12
432
1,051
(16)
(126)
–
(30)
(838)
937
406
12
402
213
1,380
261
844
231
693
(57)
–
(97)
(161)
(592)
1,323
261
747
70
101
Total
5,507
(1,144)
4,363
6,075
(907)
5,168
Movements in provision for impairment of trade receivables:
2015
2014
(907)
–
(778)
527
14
(725)
81
(886)
581
42
(1,144)
(907)
USD’000
At 1 January
Amounts written off
Additional provisions
Unused provision reversed
At 31 December
The carrying amounts of the Group’s net trade receivables are denominated in the following currencies:
2015
2014
US Dollar (USD)
Euro (EUR)
Other
1,544
2,445
374
3,243
1,646
279
Total
4,363
5,168
USD’000
58
Myriad Group AG
Annual Report 2015
2015
2014
Cash at banks and petty cash
37,797
23,087
Total
37,797
23,087
USD’000
Strategic Report
19 Cash and cash equivalents
20 Share capital
The Company’s shares are registered shares with a nominal value of CHF 0.10 each.
2015
Number of
shares
Issued capital at 1 January
Shares issued through exercise of employee stock options
Shares issued through private placements
Translation adjustment
Issued capital at 31 December
Number of
shares
Share capital
USD’000
10,231
91,963,746
25
295,645
905
9,400,000
(108)
–
11,053 101,659,391
10,340
34
1,033
(1,176)
10,231
20
–
20
–
–
10,785,283
–
1,079
8,600,000
5,222,179
865
526
During 2015, 240,656 employee stock options were exercised resulting in net proceeds to the Company of CHF 346,901
(USD 358,000). During 2014, 295,645 employee stock options were exercised resulting in net proceeds to the Company
of CHF 496,161 (USD 547,000).
Thereof treasury shares
At 31 December:
Authorised unissued share capital
101,659,391
240,656
8,600,000
–
110,500,047
2014
Share capital
USD’000
Shares issued through a private placement
On 8 April 2015 the Company completed a successful private placement of 8,600,000 shares from authorised capital
resulting in an increase in issued share capital of CHF 860,000 (USD 905,000) and an increase in the share premium
account of CHF 33,540,000 (USD 35,643,000). The net proceeds to the Company were CHF 32,007,000 (USD
34,001,000). Transaction costs incurred in relation to the private placement were USD 2,547,000.
Authorised unissued share capital
Authorised capital allows the Board of Directors (‘Board’) to place shares to investors over a two-year period to the limit
set out in the authorised capital.
At the AGM of 26 May, 2014 the Shareholders approved the creation of authorised share capital of CHF 1,800,000
consisting of 18,000,000 shares with a nominal value of CHF 0.10 each. At 31 December 2015, all amounts had been
issued through private placements.
Of the conditional capital of CHF 1,078,528.30 (10,785,283 shares of CHF 0.10 each) as at 31 December, 2015 (2014: CHF
522,217.90 (5,222,179 shares of CHF 0.10 each)), CHF 1,078,528.30 (2014: CHF 522,217.90) is reserved for the exercise of
stock option rights which may be granted to members of the Board, employees of the Group as well as members of an
Advisory Board (not established) under Group stock option plan(s) as approved by the Board. The subscription rights of
the shareholders with respect to these shares are excluded.
Myriad Group AG
Annual Report 2015
59
On 9 September 2014 the Company completed a successful private placement of 9,400,000 shares from authorised
capital resulting in an increase in issued share capital of CHF 940,000 (USD 1,033,000) and an increase in the share
premium account of CHF 27,260,000 (USD 29,763,000). The net proceeds to the Company were CHF 27,041,000 (USD
29,522,000). Transaction costs incurred in relation to the private placement were USD 1,274,000.
21 Loans and borrowings
2015
2014
Repayable government loans
Finance lease liabilities
6,754
–
7,521
138
Total
6,754
7,659
Of which:
Current
Non-current
884
5,870
1,122
6,537
Total loans and borrowings
6,754
7,659
USD’000
a) Repayable government loans
Myriad France SAS participated in a R&D programme under which it received financing from the French Government.
According to the terms of the arrangement part of the funding is received in the form of a government grant and part is
received as a repayable loan if the resulting technology is successfully commercialised and generates a certain level of
revenue. Repayable government loans are not discounted due to uncertainty in respect of the repayment period. They
are denominated in EUR and carried at the value of the original proceeds and incur no interest. The carrying value at
31 December 2015 is USD 5,870,000 (2014: USD 6,537,000).
Myriad France SAS is eligible to receive R&D tax credits, under the current regime these credits are payable to the
company after three years. The company is able to borrow against these future receivables up to 80% of the funded
amount. During 2015 Myriad France SAS has borrowed a total of USD 621,000 against USD 775,000 due to be received
in 2016, in respect of amounts claimed during 2012, and USD 263,000 against USD 329,000 due to be received in 2017,
in respect of the 2013 claim. The loan bears interest at EURIBOR+2.20% payable monthly in arrears and is secured
against the future tax credit receipts.
b) Finance lease liabilities
Lease liabilities are effectively secured as the rights to the leased asset revert to the lessor in the event of default.
2015
2014
Amounts payable under finance leases:
Within one year
In the second to fifth years inclusive
–
–
138
–
Gross lease liabilities
Less: future finance charges
–
–
138
–
Present value of finance lease liabilities
–
138
USD’000
60
Myriad Group AG
Annual Report 2015
2015
2014
Trade payables
VAT and other tax related payables
Other payables
Employee compensation related accruals
Accrued expenses
2,212
137
2,249
2,580
2,659
2,305
68
2,530
4,446
5,255
Total
9,837
14,604
Of which:
Current
Non-current
9,837
–
14,543
61
Total
9,837
14,604
USD’000
USD’000
2015
2014
Present value of defined benefit obligations
Fair value of plan assets
183
–
283
–
Total recognised pension liability of defined benefit plans
183
283
The movement in the present value of the defined benefit obligation over the year is as follows:
2015
2014
At 1 January
283
298
Current employer service cost
Past employer service cost
Interest cost
23
(75)
3
31
(51)
8
(49)
(12)
(21)
36
(21)
36
Remeasurements:
Actuarial (gain) loss
(30)
(39)
At 31 December
183
283
USD’000
2015
2014
Current employer service cost
Past employer service cost
Interest cost
23
(75)
3
31
(51)
8
Cost of defined benefit plans
Cost of defined contribution plans
(49)
415
(12)
351
Total pension cost for the year (note 10)
366
339
The amounts recognised in the income statement are as follows:
The total actuarial gain (loss) recognised in the statement of comprehensive income is USD 21,000 (2014: loss of USD
36,000).
Expected net periodic pension costs of defined benefit plans for the next financial year are USD 30,000 (2014: USD
40,000). Expected employer contributions for defined benefit plans for the next financial year are nil (2014: USD nil).
Myriad Group AG
Annual Report 2015
61
USD’000
23 Pension liabilities
The following disclosures relate to the pension plans in France which qualifies as defined benefit plan. The amounts recognised in the balance sheet are determined as follows:
Strategic Report
22 Trade and other payables
23 Pension liabilities continued
The principal weighted average actuarial assumptions, used for the calculation of the defined benefit obligation as well
as the net periodic pension cost, were as follows:
2015
2014
Discount rate
2.00%
2.00%
Inflation rate
2.00%
2.00%
Expected rate of salary increases
2.00%
2.00%
Assumptions regarding future mortality experience are set based on actuarial advice in accordance with published
statistics and experience.
The five-year history of experience adjustments is as follows:
2015
2014
2013
2012
2011
(183)
–
(183)
(21)
–
(283)
–
(283)
36
–
(298)
–
(298)
10
–
(777)
36
(741)
12
1
(497)
31
(466)
(91)
8
USD’000
2015
2014
Deferred tax assets:
– Deferred tax asset to be recovered within 12 months
100
148
100
148
USD’000
Present value of defined benefit obligation
Fair value of plan assets
Deficit in the plan
Experience losses (gains) on plan liabilities – amount
Experience gains on plan assets – amount
The actual return on plan assets was 0.0% (2014: 0.0%).
24 Deferred tax assets (liabilities)
The analysis of deferred tax assets and liabilities is as follows:
Deferred tax liabilities:
– Deferred tax liability to be recovered within 12 months
Deferred tax assets (liabilities) (net)
(6)
(458)
(6)
(458)
94
(310)
The following are the major deferred tax liabilities and assets recognised by the Group and movements thereon:
Intangible
assets
(excluding
goodwill)
USD’000
Other
temporary
differences
Other
deferred tax
assets
Total
At 1 January 2014
Credited to the income statement
(477)
27
(2)
(5)
(2)
1
188
(37)
(3)
(294)
(12)
(4)
At 1 January 2015
(452)
(6)
148
(310)
452
–
–
–
Charged to the income statement
At 31 December 20151
–
(6)
(41)
(7)
100
411
(7)
94
1. The deferred tax assets/liabilities are calculated at the respective closing exchange rate whereas the changes in temporary differences shown in note 12
showing the components of income tax expense are calculated at the average rate of the respective year. The Group has recognised a deferred tax asset in
respect of temporary timing differences in its Chinese subsidiary, where the Group anticipates future trading profits.
62
Myriad Group AG
Annual Report 2015
USD’0001
Expiry date
2015
2014
2015
2016
2017
2019
2020
2021
2022
2032
2033
To be carried forward without expiry
–
34,364
11,291
21,119
8,897
10,127
681
22,229
550
116,323
7,855
39,238
11,359
21,247
8,951
10,188
814
26,575
657
120,537
Total
225,581
247,421
Strategic Report
At the balance sheet date the Group has unused tax losses available for offset against future profits as follows:
1. The tax losses carried forward and the deferred tax assets/liabilities are calculated at the respective closing exchange rate. Therefore, the movements in
unrecognised tax loss carry forwards include currency conversion differences.
25 Provisions
USD’000
Legal
provisions
At 1 January 2015
Provisions utilised
2,239
–
(229)
At 31 December 2015
2,010
Lease
provisions
706
(706)
–
–
Total
2,945
(706)
(229)
2,010
2015
2014
Current
Non-current
2,010
–
2,945
–
Total
2,010
2,945
USD’000
26 Operating leases
The Group leases various offices and equipment under non-cancellable operating lease agreements. The future
aggregate minimal lease payments under non-cancellable operating leases are as follows:
USD’000
2015
2014
Within one year
In the second to fifth years inclusive
After five years
267
192
–
451
1,361
275
Total
459
2,087
The amounts charged in arriving at the profit from operations for the year in respect of operating leases was USD
768,000 (2014: USD 588,000).
63
The amount represents a provision for legal claims brought by former employees (see note 27).
Myriad Group AG
Annual Report 2015
There is no deferred tax asset recognised in relation to losses due to the uncertainty of future utilisation. Unused tax
losses referred to above are available for use in Canada, France, Switzerland and the United Kingdom where the current
tax rates are 26.90%, 33.33%, 20.85% and 20.00% respectively.
27 Guarantees, pledges in favour of third parties and contingent liabilities
Myriad France SAS, MobiWire and SAGEM Telecommunications are currently contesting a writ from 45 former
employees instituted on 27 July 2011 in the labour court of Pontoise for additional compensation in connection with
the alleged nullity of the Social Plan of Myriad France SAS. This follows the Sagem Termination agreement completed
in 2010.
The Court of Appeal reversed the decision to nullify the Social Plan on 16 May 2013, but denied its competence to rule
on Myriad’s request to hold SAFRAN and Sofinnova jointly and severally liable for the restructuring costs. Considering
the court decision regarding the Social Plan, the plaintiffs asked for additional time to amend their pleadings. A hearing
took place on 19 December 2013 in front of a ‘conseil de prud’hommes’. On 13 March 2014, the ‘conseil de
prud’hommes’ declined to rule on the merits. Accordingly, the case was transferred to a professional judge within the
labour court. Prior to the hearing of the labour court, the Minster of Labor determined that Myriad’s claim that it was
under economic duress was certified, and therefore, established a basis for the termination of the employees. A full
hearing took place on 8 July 2014 and on 10 October 2014, the judge issued her decision. She determined that the 45
employees were entitled to an additional payment of approximately €1,486,672. Myriad has appealed the judgement
and the hearing for such appeal is scheduled for 7 March 2017. Appropriate provisions have been made.
Apart from the actions noted above, 7 “protected employees” that were employed together with the 45 employees
described above were dismissed for economic reasons in November 2013, with the authorisation of the labor inspector.
These former employees have brought two separate legal cases to challenge the actions taken. On 6 January 2014, a
complaint was filed contesting the validity of the decision to make their jobs redundant. The matter was heard before
the Labor Work Council (First Level) of Pontoise on 2 April 2015. At such hearing, the Council adjudicated in favour of
Myriad with respect to three (3) of the “protected employees”. Those 3 employees have appealed the decision. No date
has been set for such appeal but the appeal is unlikely to be heard in 2016, given the current pace of the docket. The
remaining four (4) of the “protected employees” will have their claims heard before a professional judge on March 22,
2016. Either party may appeal the decision, however, an appeal is unlikely to be heard in 2016, given the current pace of
the docket. They are also contesting the authorisation Myriad France SAS received from the French Labor Ministry for
their dismissal. The authorisation provides Myriad France with important legal justification for the validity of the
dismissals on the grounds of redundancy. They were all “employee representatives” of the Myriad Works Council, and
therefore, authorisation was required before any of these employees could be dismissed. The authorisation was
received by Myriad on 28 October 2013. On 27 December 2013, a claim was filed contesting the validity of that
authorisation with the Administrative Tribunal of Chambery. A hearing date has yet to be set in this matter. The decision
of the Administrative Tribunal of Chambery may be appealed by either party before the Administrative Court in Lyon. An
appeal is unlikely to be heard in 2016. No provision has been made in respect of these actions as success is considered
highly unlikely.
The Group may grant guarantees in the normal course of business.
At 31 December 2015, performance guarantees and tender bonds had been issued to customers and prospects by the
Myriad Connect totalling USD 45,470 (2014: USD 49,670). All such bank guarantees were secured by liens in amounts
equal to the guaranteed amounts on cash accounts held at the issuing banks.
Management are not aware of any other significant commitments or contingent liabilities which have not been
disclosed in these consolidated financial statements.
64
Myriad Group AG
Annual Report 2015
USD’000
Financial assets
Loans and receivables:
Long-term investments and other financial assets
Net trade receivables
Other receivables
Other financial liabilities:
Trade payables
Other payables
2015
2014
16
18
18
19
211
4,363
1,586
37,797
225
5,168
1,263
23,087
43,957
29,743
6,754
2,212
137
2,249
7,659
2,305
68
2,530
11,352
12,562
21
22
22
22
29 Financial risk management
Financial risk factors
The Board of Directors bears ultimate responsibility for risk management. Management has to ensure that adequate
control processes and mechanisms are in place and that internal resources are set aside to carry out risk management
in an efficient and effective way. Management monitors risk management and reports to the Board on a regular basis.
Note
Strategic Report
28 Financial instruments
The following table shows the carrying amount of all financial instruments by category:
The Group’s activities expose it to a variety of financial risks: market risk (including currency risk and interest rate risk),
credit risk and liquidity risk. The following sections provide an overview of each of these risks.
(a) Market risk
The Group is exposed to a variety of market risks, principally including the effect of changes in interest rates and
changes in foreign currency exchange rates.
At 31 December, 2015, if other currencies (predominantly Euros, Swiss Francs, Sterling and Canadian Dollars) had
weakened/strengthened by 10% against the USD with all other variables held constant, the profit/loss before income
tax in respect of each currency would have been:
USD’000
Euros
Swiss Francs
Sterling
Canadian Dollars
2015
2014
596
2,988
473
516
998
1,601
657
647
If the Swiss Franc weakened/strengthened by 10% against the USD the impact on equity would be USD 16,468,000.
This sensitivity analysis includes only outstanding non-USD denominated financial instruments. Based on foreign
exchange rate fluctuations compared to USD experienced during 2015 a 10% (2014: 10%) fluctuation is deemed a
reasonable possibility.
(ii) Interest rate risk
Interest rate risk arises from movements in interest rates, which could have adverse effects on the Group’s net income
or financial position. The Group has no significant interest rate exposure. The Group places its cash and cash
equivalents primarily in short-term interest-bearing accounts. Information on the Group’s interest-bearing liabilities is
set out in note 21. Revenue and operating cash flows are substantially independent of changes in market interest rates.
Myriad Group AG
Annual Report 2015
65
(i) Foreign exchange risk
Revenue in the parent company generally arises in US Dollars and Euros whereas the related costs are incurred in
Swiss Francs. Revenue and related costs in the Chinese subsidiary generally arises in Chinese Yuan. Revenue in the
French subsidiary generally arises in US Dollars and Euros whereas the related costs are incurred in Euros. Operating
costs in other Group companies are generally incurred in local currencies.
29 Financial risk management continued
(b) Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet
its contractual obligations.
Bank deposits, cash equivalents and short-term investments are placed with banks and financial institutions with a
rating of at least ‘A-‘ as measured by Standard & Poor’s.
Concentration of credit risk is primarily associated with trade receivables. The Group has numerous customers located
in a variety of geographical regions. The Group’s policy is to only recognise revenue on the achievement of payment
milestones and based on customer royalty reports, all invoices are payable within contractual terms based on the
invoice date.
The credit quality of trade debtors that are neither past due nor impaired is assessed by reference to external credit
ratings where available. Where no external credit rating is available, historical information about counterparty default
rates is used.
The Group establishes an allowance for doubtful debts that represents its best estimate of incurred losses in respect of
trade and other receivables. The allowance is based on specific loss components that relate to individually significant
exposures.
The maximum credit risk on financial instruments corresponds to the carrying amount of the individual financial
assets.
(c) Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. A shortage of
liquid assets can occur at any point in time due to an unfavourable development in the operation of the business.
The Group places a high priority on the monitoring of liquidity risk and takes corrective action at an early stage to
ensure financial obligations can be met as they arise. The appropriate level of liquidity is maintained through credit
lines, negotiation of terms of certain debt instruments or further financing through major stakeholders.
The following tables show the maturity of the financial liabilities.
Maturity analysis of financial liabilities as at 31 December 2015:
Carrying Future finance
amount
charges
USD’000
Trade payables
Other payables
Total financial liabilities
Undiscounted
contractual
cash flow
amount
Within 1 year
1-2 years
2-5 years
6,754
2,212
137
2,249
–
–
–
–
6,754
2,212
137
2,249
884
2,212
137
2,249
–
–
–
–
5,870
–
–
–
11,352
–
11,352
5,482
–
5,870
Carrying Future finance
amount
charges
Undiscounted
contractual
cash flow
amount
Maturity analysis of financial liabilities as at 31 December 2014:
USD’000
Trade payables
Other payables
Total financial liabilities
66
Myriad Group AG
Annual Report 2015
Within 1 year
1-2 years
2-5 years
7,659
2,305
68
2,530
–
–
–
–
7,659
2,305
68
2,530
1,122
2,305
68
2,469
–
–
–
61
6,537
–
–
–
12,562
–
12,562
5,964
61
6,537
Strategic Report
Capital risk management
The Board’s policy is to maintain a strong capital base so as to maintain investor, other stakeholder and market
confidence and to sustain future development of the business.
The Group monitors capital on the basis of the debt:equity ratio.
USD’000
2015
2014
Debt
Equity
6,754
36,276
7,659
65,535
Ratio
18.6%
11.7%
30 Related party transactions
Related parties are members of the Executive Management Team, the Board of Directors and close family members of
the aforementioned parties, and shareholders holding in excess of 20% of the share capital, as well as entities under
these parties’ control.
On 5 February, 2014 the Company sold 500,000 shares to a member of the Board of Directors at a price of CHF 1.40. The
purchase price was paid in full. No amounts were outstanding at 31 December, 2014.
On 25 November 2013 the Company sold 500,000 shares to members of the Board of Directors and Key Management at
a price of CHF 1.10. To fund the purchase, members of Key Management received a loan from the company of CHF
88,000. Interest was charged at 4% per annum and amounted to CHF 1,345 in 2014. No amounts were outstanding at 31
December 2014.
Compensation paid to the members of Key Management
2015
Postemployment
benefits
Termination
benefits
Share-based
payment
benefits1
Total
compensation
2015
Board
Executive team
305
3,002
–
262
–
–
91
3,475
396
6,739
Total Key Management
3,307
262
–
3,566
7,135
Short-term
employment
benefits
Postemployment
benefits
Termination
benefits
Share-based
payment
benefits1
Total
compensation
2014
Board
Executive team
268
2,341
–
47
–
–
57
1,010
325
3,398
Total Key Management
2,609
47
–
1,067
3,723
USD’000
2014
USD’000
1. The amount noted above is the total that affects profit or loss during the period, this is not the fair-value of options awarded.
Shareholdings of members of the Board of Directors, Key Management or persons related to them as at 31 December:
2015
Number of
shares
Erik Hansen
Mauro Saladini
David Nuescheler
Stephen Dunford
Peter McCormack
Richard Francis
Kate Criniti
Olivier Bartholot
Bruce Jackson
Chairman of the Board, Head CNC
Board Member, Head AC
Board Member
Resigned 2015
General Counsel
Resigned 2015
2014
Number of
options
140,000
133,643
–
20,000
500,000
40,000
120,000 2,500,000
– 200,000
60,000 1,022,942
– 653,332
20,000 988,335
30,000 1,500,000
Number of
shares
Number of
options
140,000
103,643
30,000
10,000
500,000
30,000
120,000 1,255,464
–
73,333
60,000
740,006
– 400,000
20,000
662,732
30,000
816,976
Myriad Group AG
Annual Report 2015
67
Short-term
employment
benefits
On 17 June, 2015 a member of the Executive Management Team received a loan from the Company of GBP 22,600 (USD
34,560). Interest is charged at 4% per annum and amounted to GBP 480 (USD 740) during the year. The loan
outstanding at 31 December, 2015 was GBP 23,082 (USD 34,080).
31 Events after the reporting period
The Board of Directors authorised these consolidated financial statements on 24 February 2016 for issue on 25
February 2016. They are subject to approval at the Annual General Meeting of Shareholders to be held on 24 March,
2016.
32 Principal Subsidiaries
The Group has the following shareholdings of the ordinary share capital of its principal subsidiaries:
Share capital (million)
Name
Myriad Mobile Software Inc
Myriad (China) Co. Ltd
Myriad Group Korea Co. Ltd
Myriad France SAS
Myriad Group UK Ltd
USD 0.1
CNY 2.0
KRW 0.01
EUR 0.5
GBP 0.0
2
Country of
incorporation Function
Proportion of
voting rights
held in 2015
Proportion of
voting rights
held in 2014
Sales and Support
100%
100%
Engineering services,
Sales and Support
100%
100%
South Korea Sales and Support
–
100%
Sales and Support
100%
100%
Non trading
100%
100%
100%
100%
100%
USA
China
France
UK
JPY 5.0
Japan
Sales and Support
BRL 0.03
Brazil
Sales and Support
100%
MG Mobile Software Mexico,
S. De R. L. De C. V.
MXN 0.0 4
Mexico
Sales and Support
100%
100%
Synchronica Ltd
USD 37.4
UK
Sales and Support
100%
100%
Synchronica America Ltd
GBP 0.05
UK
Non trading
100%
100%
Project Robin II Ltd
GBP 0.06
UK
Dormant
100%
100%
USD 0.2
Israel
Dormant
100%
100%
HKD 0.07 Hong Kong Dormant
100%
100%
Myriad Japan Inc
Myriad Mobile Solutions de Softwares
do Brasil LTDA
Axis Mobile Ltd
Axis Mobile (APAC) Ltd
Synchronica Mobile Gateway Pty Ltd
Synchronica Philippines Inc.
Synchronica Inc.
msngr AG
1.
2.
3.
4.
5.
6.
7.
68
100%
100%
100%
sales and Support
100%
100%
CHF 0.1 Switzerland sales and Support
100%
100%
India
PHP 8.6 Philippines Non trading
CAD 32.0
Canada
Myriad Group Korea Co. Ltd was closed during the year.
Myriad Group UK Ltd’s share capital is GBP 1.
Myriad Mobile Solutions de Softwares do Brasil LTDA’s share capital is BRL 1,000.
MG Mobile Software Mexico, S. De R. L. De C. V.’s share capital is MXN 3,000.
Synchronica America Ltd’s share capital is GBP 100.
Project Robin II Ltd’s share capital is GBP 1.
Axis Mobile (APAC) Ltd’s share capital is HKD 10,000.
Myriad Group AG
Annual Report 2015
Sales and Support
100%
INR 0.1
Report of the statutory auditor to the
general meeting of Myriad Group AG, Zurich
Strategic Report
Report of the statutory auditor on the consolidated financial statements
As statutory auditor, we have audited the accompanying consolidated financial statements of Myriad Group AG, which
comprise the consolidated income statement, consolidated statement of comprehensive income, consolidated
statement of financial position, consolidated statement of changes in equity, consolidated statement of cash flows and
notes (pages 32 to 68), for the year ended 31 December 2015.
The Board of Directors is responsible for the preparation and fair presentation of the consolidated financial statements
in accordance with the International Financial Reporting Standards (IFRS) and the requirements of Swiss law. This
responsibility includes designing, implementing and maintaining an internal control system relevant to the preparation
and fair presentation of consolidated financial statements that are free from material misstatement, whether due to
fraud or error. The Board of Directors is further responsible for selecting and applying appropriate accounting policies
and making accounting estimates that are reasonable in the circumstances.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the
assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or
error. In making those risk assessments, the auditor considers the internal control system relevant to the entity’s
preparation and fair presentation of the consolidated 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 system. An audit also includes evaluating the appropriateness of the accounting policies used and the
reasonableness of accounting estimates made, as well as evaluating the overall presentation of the consolidated
financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinion.
Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We
conducted our audit in accordance with Swiss law and Swiss Auditing Standards as well as the International Standards
on Auditing. Those standards require that we plan and perform the audit to obtain reasonable assurance whether the
consolidated financial statements are free from material misstatement.
Opinion
In our opinion, the consolidated financial statements for the year ended 31 December 2015 give a true and fair view of
the financial position, the results of operations and the cash flows in accordance with the International Financial
Reporting Standards (IFRS) and comply with Swiss law.
In accordance with article 728a paragraph 1 item 3 CO and Swiss Auditing Standard 890, we confirm that an internal
control system exists which has been designed for the preparation of consolidated financial statements according to
the instructions of the Board of Directors.
We recommend that the consolidated financial statements submitted to you be approved.
Martin Kennard
Audit expert
Auditor in charge
Audit expert
Myriad Group AG
Annual Report 2015
69
Report on other legal requirements
We confirm that we meet the legal requirements on licensing according to the Auditor Oversight Act (AOA) and
independence (article 728 CO and article 11 AOA) and that there are no circumstances incompatible with our
independence.
Statutory financial statements
Myriad Group AG, Zurich
Profit and loss statement
For the year ended 31 December
2015
2014
11,693,736
3,455,061
13,500,436
14,376,698
3,394,942
13,374,677
28,649,233
(10,681,259)
(3,203,394)
(5,740,197)
(41,448,802)
(30,968,830)
–
31,146,317
(529,477)
(4,682,218)
(2,095,828)
(34,154,887)
–
150,000
Loss before interest and taxes
Financial income
Financial expenses
(63,393,249)
163,370
(11,579)
(10,166,093)
434,893
(26,331)
Loss before taxes
Direct taxes
(63,241,458)
102,885
(9,757,531)
(366,240)
Loss for the year
(63,138,573)
(10,123,771)
CHF
Note
Licence revenue
Service revenue
Revenue with Group companies
Total revenue
Cost of revenue
Research and development, net of capitalised costs
Sales and marketing costs
Administrative expenses
Value adjustment on investments
Other income
70
Myriad Group AG
Annual Report 2015
3.2
3.3
3.4
3.5
3.6
3.7
At 31 December
2015
2014
Current assets
Trade receivables
due from third parties
due from Group companies
Other current receivables
due from third parties
Accrued income and prepaid expenses
32,453,085
5,741,432
1,242,546
4,498,886
31,527
31,527
2,304,369
16,726,657
16,191,416
1,157,344
15,034,072
111,032
111,032
3,526,551
Total current assets
40,530,413
36,555,656
2,018,396
1,999,825
18,571
2,681,926
–
822,646
7,388,175
7,379,750
8,425
33,650,756
10,745
2,925,647
5,522,968
43,975,323
46,053,381
80,530,979
CHF
Note
Strategic Report
Balance sheet
ASSETS
4
Total non-current assets
TOTAL ASSETS
Non-current assets
Financial assets
Loans to Group companies (net)
Other financial assets
Investments (net)
Property, plant and equipment
Intangible assets
At 31 December
CHF
Note
2015
2014
LIABILITIES
486,583
1,614,367
223,132
740,428
1,789,127
171,879
2
5,139,422
Total liabilities
3,239,270
6,925,670
11,050,004
139,196,302
126,348,704
12,847,598
(44,293,620)
(63,138,573)
(2)
10,165,939
107,732,992
94,885,394
12,847,598
(34,169,849)
(10,123,771)
(2)
Total shareholders’ equity
42,814,111
73,605,309
TOTAL EQUITY AND LIABILITIES
46,053,381
80,530,979
Shareholders’ equity
Share capital
Legal capital reserves
Reserves from capital contribution
Other capital reserves
Loss brought forward
Loss for the year
Treasury shares
5
6
Myriad Group AG
Annual Report 2015
71
Short-term liabilities
Trade payables
due to third parties
Other short term liabilities
due to third parties
due to Group companies
Accrued expenses and deferred income
Notes to the statutory financial statements
1 General information
Myriad Group AG (‘the Company’) is a company incorporated in Zurich, Switzerland, whose shares are quoted on the
SIX Swiss Exchange.
The accompanying financial statements present information relating to the Company only and are presented in Swiss
Francs (CHF). The functional currency of the Company is considered to be Swiss Francs (CHF).
The number of full-time equivalents employees, averaged over the year, did not exceed 10.
2 Accounting principles applied in the preparation of the financial statements
2.1 Basis of preparation
The accompanying financial statements have been prepared in accordance with the requirements of Swiss law and the
Company’s Articles of Incorporation. The financial statements have been prepared on a historical cost basis and are
presented on the basis that the Company will continue as a going concern. In order to comply with the new Swiss Code
of Obligations (CO), some reclassification of comparatives within these financial statements has been necessary.
2.1.1 Going concern
These Company financial statements have been prepared on the going concern basis which is supported by detailed
monthly cash flow and trading forecasts covering the period to 30 June 2017 and a medium-term business plan
thereafter.
The Company cash flow forecast has additionally been modelled using a range of reasonably possible sensitivities,
which all indicate that the Company has sufficient liquid funds to meet its financial commitments as they fall due
throughout the forecast period. On this basis, the Board and Management are satisfied that the Company has
sufficient funds to meet its financial obligations as they fall due. The Company therefore continues to adopt the going
concern basis in preparing its financial statements.
2.2 Foreign currency translation
Transactions in foreign currencies are recorded at the rate of exchange at the date of the transaction. Any difference in
exchange rates between the original transaction date and the subsequent settlement date is recorded in the income
statement as a gain or loss.
Monetary assets and liabilities in foreign currencies are translated at year-end rates. Non-monetary assets and
liabilities are translated at the exchange rate prevailing at the date of transaction.
The net foreign exchange result is disclosed in the financial income or financial expenses line.
2.3 Property, plant and equipment
Furniture and equipment is stated at historical cost less accumulated depreciation and impairment losses. Cost
includes the original purchase price of the asset and the costs attributable to bringing the asset to its working
condition for its intended use. The depreciation is calculated on a straight-line basis over the following estimated
useful lives:
•
•
•
•
Furniture – 5 years
IT infrastructure – 3 years
Office refurbishment – 10 years, or the remainder of the lease term if shorter
Other equipment – 5 years
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting
period.
Gains and losses on disposal are determined by comparing the proceeds with the carrying amount and are recognised
within other income and expenses in the income statement.
72
Myriad Group AG
Annual Report 2015
Strategic Report
2.4 Intangible assets
Software, intellectual property and trademarks are shown at historical cost less accumulated amortisation and
impairment losses. Amortisation is calculated on a straight-line basis over the following estimated useful lives:
• Software – 5 years
• Intellectual property – 2.5 to 7 years
• Trademarks – 5 years
2.5 Investments
Investments in subsidiary undertakings are shown at historical cost. Investments are tested annually for impairment or
whenever indicators of impairment exist. The valuation of investments in group companies is performed on an
individual basis in accordance with article 960 para. 1 CO.
2.6 Trade and other receivables
Trade receivables are initially recorded at historic cost and subsequently held at historic cost less any provision for
impairment.
2.7 Cash and cash equivalents
Cash and cash equivalents includes cash in hand, deposits at call with banks and other short-term highly liquid
investments with original maturities of three months or less.
Additions to the provision for doubtful debts are made based on the specific identification of accounts where collection
is considered to be at risk. Trade receivables are checked on a regular basis. As soon as there are indications, such as
feedback obtained from account managers and other personnel in direct contact with the customer, payment history of
the customer, updated credit rating reports and information available in the market, that there is a position at risk,
management decides on the necessary level of the provision. The provision for doubtful debts is reduced when the
account is recovered or written off.
2.8 Trade payables
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business
from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less (or in the
normal operating cycle of the business if longer). If not, they are presented as non-current liabilities. Trade payables are
recognised initially at historic cost.
2.9 Revenue recognition
The Company recognises revenue when all of the following conditions are satisfied: persuasive evidence of an
agreement exists, delivery has occurred, the fee is fixed or determinable, and collection is deemed probable.
• Persuasive evidence of an agreement: Myriad considers signed contracts and purchase orders as adequate
documents that provide persuasive evidence of the existence of an agreement. If standard practice includes use of
signed contracts, then persuasive evidence is provided only by a contract signed by both parties. If it is a client’s
business practice to use only purchase orders, then evidence must specify governing terms and conditions.
• Delivery must have occurred: Myriad considers the delivery to have occurred upon the transfer of the product master
or first copy, in the case of products sold in the Device Solutions Division, or upon formal customer acceptance, in
the case of products sold in the Mobiles Services Division. Any contracts that provide for the delivery of future
software, other than unspecified upgrades or enhancements, are additional elements and are initially recorded as
deferred revenue. After delivery, if uncertainty exists about customer acceptance of the software, recognition of
licence revenue is deferred until acceptance occurs.
• Fees must be fixed or determinable: In the Device Solutions Division, Myriad considers a fee to be fixed or
determinable if the amount of the unit fee and number of copies is defined in the contractual agreement with the
customer. In the Mobile Services Division, the fee is considered to be fixed when the capacity level and related price
has been agreed.
• Collection must be probable: Myriad has a close relationship with its customers and carefully monitors their
creditworthiness. Collection is deemed probable if Myriad expects that the customer will be able to pay amounts
under the arrangement as payments become due. If Myriad determines that collection is not probable, revenue is
deferred and recognised upon cash collection.
Myriad Group AG
Annual Report 2015
73
a) Licence revenue
The general revenue recognition criteria set out above are applied as follows with respect to licence revenues:
Notes to the statutory financial statements continued
2 Accounting principles applied in the preparation of the financial statements continued
Standard terms of the licence agreements for the Device Solutions Division require the licensee to document the total
number of shipments of products incorporating Myriad’s technology and report this data to Myriad on a quarterly
basis.
Licence agreements pursuant to which customers commit to purchase Myriad’s software for a specified period of time
but that do not specify minimum purchasing requirements are referred to as duration contracts. Duration contracts
also include a fixed fee, which is based on the number of shipments. Under duration contracts, customers report the
number of devices shipped incorporating Myriad software on a quarterly basis, and are invoiced for licence fees
accordingly. Revenue is recognised under such contracts based upon the quarterly royalty reports.
In the case of licence agreements which provide for a minimum committed volume of units over a pre-defined period of
time, whereby any amount not consumed by the customer is non-refundable, and in the case of licence agreements
which provide to the customer an unlimited, perpetual licence to ship devices with Myriad’s software, the Company
recognises revenues upon execution of the contract.
Myriad Connect Division
Standard terms of the licence agreements for the Mobile Services Division call for the sale of a licence which permits a
server to manage up to a specified number of Unstructured Supplementary Service Data (USSD) messages per second,
known as capacity-based licences. These licences are sold to mobile operators as part of a turnkey solution, which
includes installation and other services. Myriad recognises revenue from the sale of its capacity-based software
licences upon formal acceptance of the full solution by the customer. Installation and other services are accounted for
separately.
Where Myriad provides a messaging solution via the USSD network of a partner mobile operator, it earns a percentage
share of the revenue generated for that operator. Myriad recognises revenue in the month that services are delivered.
In addition, Myriad recognises all of the costs related to the sale of such licences, including the cost of licences and
selling expenses, at the time revenue is recognised.
b) Service revenue
Service revenue consists of non-recurring engineering, installation, training, consulting, and technical support
services. Revenue on fixed-price projects, for which Myriad’s engineering services contracts typically are incurred, is
recognised based on an estimated percentage of completion as work progresses. Where revenue is recognised in
advance of amounts being invoiced the difference is shown as accrued income in trade and other receivables.
Estimated losses on fixed-price service arrangements are recognised immediately when it becomes apparent a loss
will be incurred. After such a determination, it is possible that actual losses realised will be greater than the estimate
previously recorded. These differences could be material.
Revenue from training and consulting service elements is generally recognised as the services are performed.
Maintenance contracts include second level support to the customer and there is generally a time and response
commitment made to the customer to resolve software issues. Maintenance revenue is recognised on a straight-line
basis over the period of the contracts.
74
Myriad Group AG
Annual Report 2015
CHF
Depreciation of furniture and equipment
Amortisation of intangible assets
Personnel expenses
2015
2014
10,745
1,599,667
1,062,333
256,104
100,292
1,561,996
–
571,472
Strategic Report
3 Disclosures related to the profit and loss statement
3.1 General disclosures
As the profit and loss statement is prepared according to the function of expense method, the following expenses are
shown separately.
3.2 Cost of revenue
Cost of revenue includes amortisation of intangible assets as follows:
CHF
Total cost of revenue
2014
(2,355,887)
(5,651,947)
(11,425)
–
(1,599,667)
(1,062,333)
(1,756,748)
(6,304,689)
(158,139)
9,252,095
(1,561,996)
–
(10,681,259)
(529,477)
3.3 Research and development
Included within research and development, net of capitalised costs are the following amounts:
CHF
2015
Cost of licence revenue
Cost of service revenue
Personnel expenses
Oracle settlement
Amortisation of intangibles
Impairment of intangibles
2015
2014
Research and development costs
Personnel expenses
(3,202,296)
(1,098)
(4,653,251)
(28,967)
Total research and development
(3,203,394)
(4,682,218)
3.4 Sales and marketing costs
Included within sales and marketing costs are the following amounts:
CHF
2015
2014
(5,561,012)
(179,185)
–
–
(4,145,370)
(343,677)
2,414,096
(20,877)
Total sales and marketing costs
(5,740,197)
(2,095,828)
3.5 Administrative expenses
Included within administrative expenses are the following amounts:
CHF
2015
2014
General and administrative costs
Personnel expenses
Legal fees on Oracle settlement
Depreciation
Restructuring and integration costs
Value adjustment on intercompany receivables
(4,428,481) (6,384,512)
(64,397)
(40,689)
–
(5,662,059)
(10,745)
(100,292)
577
(12,871)
(140,216)
(230,780)
(36,805,540) (21,723,684)
Total administrative expenses
(41,448,802) (34,154,887)
Myriad Group AG
Annual Report 2015
75
Sales and marketing costs
Personnel expenses
Exclusivity fees
Restructuring and integration costs
3.6 Value adjustments on investments
2015
CHF
Value adjustments on investments
2014
(30,968,830)
–
Management has reviewed latest market conditions in assessing the value of its investments. The value adjustments
have arisen due to the technological evolution of Versy during FY 2015. The Versy product has been launched and will
continue to evolve based on the realisation that a social messaging application based around content, rather than a
pure chat application, could build a more valuable engaged user base. To deliver and respond to the accelerating
transition to smartphones in our target markets, Versy needed to focus more on smartphone architecture that would be
able to support the discovery of richer content streams in video and audio. The combination of an increased strategic
focus on a smartphone-only application and further analysis of the expected route to monetisation, means Myriad no
longer expects to significantly monetise through the technology assets and network operator relationships acquired
with the Synchronica transaction.
3.7 Other income
2015
2014
Other income:
Profit on sale of treasury shares
–
150,000
Total other income
–
150,000
CHF
4 Investments
As at 31 December, 2015 and 31 December, 2014, Myriad Group AG held investments in the following companies:
Share Capital Country of
(million) incorporation
Name
Myriad Mobile Software Inc
Myriad (China) Co. Ltd
Myriad Group Korea Co. Ltd
Myriad France SAS
Function
Proportion of
share capital
and voting
right held
by the
Company
in 2015
Proportion of
share capital
and voting
right held
by the
Company
in 2014
USD 0.1 USA
Sales and Support
100%
100%
CNY 2.0 China
Sales and Support
100%
100%
KRW 0.02 South Korea Sales and Support
–
100%
EUR 0.5 France
Sales and Support
100%
100%
JPY 5.0 Japan
Sales and Support
100%
100%
Myriad Mobile Solutions
de Softwares do Brasil LTDA
BRL 0.02 Brazil
Sales and Support
100%
100%
MG Mobile Software Mexico,
S. De R. L. De C. V.
MXN 0.03 Mexico
Sales and Support
99%
99%
Synchronica limited
USD 37.4 UK
Sales and Support
100%
100%
100%
100%
Myriad Japan Inc
msngr AG
CHF 0.1 Switzerland Sales and support
1. Myriad Group Korea Co. Ltd was closed during the year.
2. Myriad Mobile Solutions de Softwares do Brasil LTDA’s share capital is BRL 1,000.
3. MG Mobile Software Mexico S.De.R.L.De CV.’s share capital is MXN 3,000. 1% is owned by Myriad France SAS.
76
Myriad Group AG
Annual Report 2015
Strategic Report
5 Share capital
At 31 December, 2015 the share capital consisted of 110,500,047 (2014: 101,659,391) fully paid shares with a nominal
value of CHF 0.10 each, of which 110,259,391 were recorded in the register of commerce.
The following table summarises the share capital:
2015
2014
Reconciliation of share capital
– Share capital as per register of commerce
– Paid in capital not yet registered (executed stock options and conversion rights)
11,025,939
24,065
10,136,375
29,564
Total share capital
11,050,004
10,165,939
Unissued authorised and conditional share capital
– Unissued authorised share capital
– Unissued conditional share capital
–
1,078,528
860,000
522,218
Total unissued authorised and conditional share capital
1,078,528
1,382,218
CHF
Shares issued through a private placement
On 8 April 2015 the Company completed a successful private placement of 8,600,000 shares from authorised capital
resulting in an increase in issued share capital of CHF 860,000 and an increase in the share premium account of CHF
33,540,000. The net proceeds to Company were CHF 32,007,000.
During 2015, 240,656 employee stock options were exercised resulting in net proceeds to the Company of CHF 346,901.
During 2014, 295,645 employee stock options were exercised resulting in net proceeds to the Company of CHF 496,161.
Any capital increase is recorded in the register of commerce in the year following issue, but is recorded in the financial
statements in the year in which the employee stock options were exercised.
On 9 September 2014, the successful private placement of 9,400,000 shares resulted in an increase in issued share
capital of CHF 940,000 and an increase in the share premium account of CHF 27,260,000. The net proceeds to
Company were CHF 27,041,000.
At 31 December 2015 all authorised share capital had been issued through private placements. At 31 December 2014,
the authorised share capital is CHF 860,000 consisting of 8,600,000 shares with a nominal value of CHF 0.10 each.
Significant shareholders
At 31 December the significant (>3%) shareholders of the Company, according to disclosure notifications filed with
Myriad Group AG and the SIX Swiss Exchange, were as follows:
Name of shareholder
Percentage
held
Patinex AG, CH-Wilen1
VV Value Vals AG2
UBS Fund Management (Switzerland) AG
Grapal Holding AG3
25.16%
5.04%
4.68%
3.22%
1. Beneficial owners of the majority of shares in Patinex AG are Martin and Rosmarie Ebner, 8832 Wilen, Switzerland.
2. Sole shareholder of VV Value Vals AG is Mr Remo Stoffel, Salisstrasse 23, 7000 Chur/GR, Switzerland.
3. Beneficial owners of the majority of shares in Grapal Holding AG are Hansjörg Graf, Salisstrasse 23, 8832 Wollerau, Switzerland.
Other reserves
Other reserves of CHF 12,847,598 arising on the surplus of paid in capital does not qualify as a reserve from capital
contribution and as such is held in a separate reserve.
Myriad Group AG
Annual Report 2015
77
Of the conditional capital of CHF 1,078,528.30 (10,785,283 shares of CHF 0.10 each) as at 31 December 2015 (2014: CHF
522,218 (5,222,179 shares of CHF 0.10 each)), CHF 1,078,528.30 (2014: CHF 522,217.90) is reserved for the exercise of
stock option rights which may be granted to members of the Board of Directors (‘Board’), employees of the Group as
well as members of an Advisory Board (not established) under Group stock option plan(s) as approved by the Board.
The subscription rights of the shareholders with respect to these shares are excluded.
6 Treasury shares
2015
2014
Number of
shares
Carrying
value
At 1 January
Sale
20
–
2
–
At 31 December
20
2
Number of
shares
Carrying
value
500,020
550,002
(500,000) (550,000)
20
2
In 2014 the Company sold 500,000 of its own shares at a price of CHF 1.40 resulting in proceeds to the Company of CHF
700,000.
At 31 December 2015, the Company owned 20 (31 December 2014: 20) of its own shares as treasury shares.
7 Compensation and shareholdings
Details of the compensation of Board and Key Management is included in the compensation report on pages 20 to 23.
Shareholdings of members of the Board of Directors, Key Management or persons related to them as at 31 December:
2015
Number of
shares
Erik Hansen
Mauro Saladini
David Nuescheler
Stephen Dunford
Peter McCormack
Richard Francis
Kate Criniti
Olivier Bartholot
Bruce Jackson
Chairman of the Board, Head CNC
Board Member, Head AC
Board Member
Resigned 2015
General Counsel
Resigned 2015
140,000
–
500,000
120,000
–
60,000
–
20,000
30000
2014
Number of
options
133,643
20,000
40,000
2,500,000
200,000
1,022,942
653,332
988,335
1,500,000
Number of
shares
140,000
30,000
500,000
120,000
–
60,000
–
20,000
30,000
Number of
options
103,643
10,000
30,000
1,255,464
73,333
740,006
400,000
662,732
816,976
8 Related party transactions
Related parties are members of the Executive Management Team, the Board of Directors and close family members of
the aforementioned parties, and shareholders holding in excess of 20% of the share capital, as well as entities under
these parties’ control.
On 17 June 2015 a member of senior management received a loan from the Company of GBP 22,600 (CHF 32,500).
Interest is charged at 4% per annum and amounted to GBP 480 (CHF 720) during the year. The loan outstanding at 31
December 2015 was GBP 23,082 (CHF 34,070).
On 5 February 2014 the Company sold 500,000 shares to a member of the Board of Directors at a price of CHF 1.40. The
purchase price was paid in full. No amounts were outstanding at 31 December 2014.
On 25 November 2013 the Company sold 500,000 shares to members of the Board of Directors and Key Management at
a price of CHF 1.10. To fund the purchase, members of Key Management received a loan from the Company of CHF
88,000. Interest was charged at 4% per annum and amounted to CHF 1,345 in 2014. No amounts were outstanding at 31
December 2014.
Apart from the compensation paid to the Board of Directors and Key Management and the related party transaction as
disclosed above, there were no further transactions with related parties during the years ended 31 December, 2015 and
31 December 2014. Sofinnova Partners, who held in excess of 20% of the share capital during 2010, are signatories to
the Sagem Wireless settlement agreement referred to in note 9 to the consolidated financial statements.
9 Events after the reporting period
The Board of Directors authorised these financial statements on 24 February, 2016 for issue on 25 February 2016. They
are subject to approval at the Annual General Meeting of Shareholders to be held on 24 March 2016.
78
Myriad Group AG
Annual Report 2015
Appropriation of reserves
CHF
Accumulated losses at the beginning of the period
Loss for the year
Accumulated losses available to the general meeting
Proposal of the board of directors on the allocation of legal reserves
CHF
2015
2014
(44,293,620)
(63,138,573)
(34,169,849)
(10,123,771)
(107,432,193)
(44,293,620)
2015
Proposal of the board of
directors
Strategic Report
Accumulated losses carried forward
2014
Resolution of the general
meeting
Reserves from capital contribution allocated to accumulated losses
Other capital reserves allocated to accumulated losses
Accumulated losses available to the general meeting
60,000,000
12,847,598
(107,432,193)
–
–
(44,293,620)
Accumulated losses carried forward
(34,584,595)
(44,293,620)
The allocation of reserves from capital contribution and other capital reserves is proposed by the Board of Directors as
the loss for the year has meant that one-half of the share capital and the legal reserves are no longer covered within the
meaning of article 725 para. 1 CO.
Myriad Group AG
Annual Report 2015
79
Report of the statutory auditor
on the statutory financial statements
Report of the statutory auditor on the financial statements
As statutory auditor, we have audited the accompanying financial statements of Myriad Group AG, which comprise the
balance sheet, income statement and notes (pages 70-79), for the year ended 31 December 2015.
The Board of Directors is responsible for the preparation of the financial statements in accordance with the
requirements of Swiss law and the Company’s articles of incorporation. This responsibility includes designing,
implementing and maintaining an internal control system relevant to the preparation of financial statements that are
free from material misstatement, whether due to fraud or error. The Board of Directors is further responsible for
selecting and applying appropriate accounting policies and making accounting estimates that are reasonable in the
circumstances.
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in
accordance with Swiss law and Swiss Auditing Standards. Those standards require that we 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 the internal control system relevant to the entity’s preparation 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 system. An audit also includes evaluating the appropriateness of the
accounting policies used and the reasonableness of accounting estimates made, 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
In our opinion, the financial statements for the year ended 31 December 2015 comply with Swiss law and the
Company’s articles of incorporation.
Report on other legal requirements
We confirm that we meet the legal requirements on licensing according to the Auditor Oversight Act (AOA) and
independence (article 728 CO and article 11 AOA) and that there are no circumstances incompatible with our
independence.
In accordance with article 728a paragraph 1 item 3 CO and Swiss Auditing Standard 890, we confirm that an internal
control system exists which has been designed for the preparation of financial statements according to the
instructions of the Board of Directors.
We further confirm that the proposed appropriation of reserves complies with Swiss law and the Company’s articles of
incorporation. We recommend that the financial statements submitted to you be approved.
Furthermore, we draw attention to the fact that Myriad Group AG’s balance sheet shows that one-half of the share
capital and the legal reserves are no longer covered according to article 725 para. 1 CO. In order to eliminate such a
capital loss the Board of Director is proposing (see proposed appropriation of reserves) to off-set CHF 60’000’000 of
the capital contribution reserves and CHF 12’847’598 of the other capital reserves against accumulated losses.
Martin Kennard
Audit expert
Auditor in charge
80
Myriad Group AG
Annual Report 2015
Audit expert
Information for investors
Strategic Report
Share price data
Symbol: MYRN
Listing: SIX
Nominal value: CHF 0.10
ISIN: CH0019624805
Swiss Security Number (Valor): 1,962,480
2015
2014
2013
110,500,047
101,659,391
91,963,746
Year high
CHF 6.71
CHF 5.35
CHF 2.40
Year low
CHF 2.11
CHF 1.23
CHF 1.23
Year end
CHF 2.86
CHF 4.27
CHF 1.36
467,111
687,234
178,002
Number of shares at year end
Average daily trading volume (shares)
Profit (Loss) per share
Market capitalisation at year end
USD (0.63)
USD 0.09
USD (0.59)
CHF 284.0 million
CHF 434.1 million
CHF 125.1 million
Financial calendar
24 March 2016: Annual General Meeting
September 2016: Half-Year Results 2016
http://www.myriadgroup.com/Investors/Calendar
Contact information
Peter McCormack
Myriad Group AG
Care of GHR Rechtsanwälte AG
Bahnhofstrasse 64
8021 Zurich, Switzerland
Phone +41 44 823 89 00
Fax +41 44 823 89 99
Any queries please contact the Investor Relations team
[email protected]
Myriad Group AG
Care of GHR Rechtsanwälte AG
Bahnhofstrasse 64
8021 Zurich
SWITZERLAND
t: +41 (0) 44 823 89 00
e: [email protected]
www.myriadgroup.com
Myriad and certain other trade names, trademarks and logos are trademarks or registered trademarks of Myriad Group AG. All other trademarks, logos or source
marks are the property of their respective owners. All rights reserved. Copyright © Myriad Group AG 2016. CD15505 02/11
Myriad Group AG
Annual Report 2015
81
Notes
82
Myriad Group AG
Annual Report 2015
Myriad Group AG
Care of GHR Rechtsanwälte AG Zürich: Bahnhofstrasse 64 P.O. Box 3268 CH – 8021
Zürich t: +41 (0)58 356 5000 f: +41 (0)58 356 5009
e: [email protected]
www.myriadgroup.com
Myriad and certain other trade names,
trademarks and logos are trademarks
or registered trademarks of Myriad
Group AG. All other trademarks, logos
or source marks are the property of
their respective owners. All rights
reserved. Copyright © Myriad Group
AG 2015. CD15505 02/11

Annual Report - Myriad Group

Transcription

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