ASSIMA PLC CONSOLIDATED REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER Company No:

Transcription

1 CONSOLIDATED REPORT AND FINANCIAL STATEMENTS Company No:

2 CONSOLIDATED REPORT AND FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2014 CONTENTS Page Chairman s statement 1 2 Strategic report 3 Directors report 4 6 Independent Auditors report 7 Statement of Comprehensive Income 8 Consolidated balance sheet 9 Parent company balance sheet 10 Consolidated statement of changes in shareholders equity 11 Parent company statement of changes in shareholders equity 11 Consolidated cash flow statement 12 Parent company cash flow statement 13 Notes to the financial statements 14-35

3 CHAIRMAN S STATEMENT I am pleased to present a report of Assima s activities for the year ended 31 December SUMMARY 2014 is the second year in our three year plan for repositioning Assima into a larger market segment with a new software offering, Vimago, which provides a significantly higher value proposition for our customers. From 2002 to 2012, the first ten years of the company, Assima has delivered an innovative solution to replace sand-box systems, reducing training costs associated to ERP roll-outs. Starting in 2013, Assima released an additional offering aiming to improve end-user and live system performance. Vimago is a cloud platform, sold through a subscription model, from which we can monitor end-user s efficiency and inject structured information in strategic enterprise software providing contextual support and transactional enrichment. To deliver this solution, Assima has entered into a strategic partnership with IBM in early 2014, by selecting SoftLayer, an IBM Company, as our standard Infrastructure Platform to host the cloud offering. This partnership will lead to an increase of common sales and marketing initiatives in 2015 with IBM. Vimago has required a major investment in terms of R&D and sales and marketing. Since 2012 Assima has nearly doubled its R&D resources, with now more than forty employees working in our three R&D Centers (on a total workforce of more than 170 employees globally as of December 2014). In terms of sales and marketing, our efforts have been focussed on the U.S. in 2014 because we see it as the most welcoming and propitious market to deploy Vimago. These investments have been self-funded which have had negative impacts on our P&L and revenue targets in the past two years. This explains why 2014 has been a near repetition of 2013 in terms of financial performance. In 2014 our consolidated revenue decreased by 10.7% (from 19,401k to 17,327k). Assima operates in three main currency zones, USD, GBP and Euro which can have major accounting impacts when there is high volatility in conversion rates between these three currencies. As an example, in euro terms, the revenue decrease between 2014 and 2013 is reduced by 5%. This decrease in revenue has been mitigated by a good control on costs. The total cost of sales has indeed fallen more than revenue (decrease from 14,578k to 12,768k; minus 12%). This has been possible thanks to a much better use of our consultants and a massive decrease of sub-contractors costs to deliver projects (decrease from 3,160k to 2,069k; or 34%). Thanks to this our EBITDA is still positive in 2014 and nearly stable compared to More importantly, the financial health of the company demonstrated by its consolidated cash position has in fact improved in 2014 ( 2,494k as of 31 December 2014 compared to 2,231k). It is also important to mention that the company has virtually no debt except for trade and payables (loans & borrowings stand at a total of 251k as of Dec , compared to 424k in 2013). From this summary it is clear that Assima has been able to navigate through this strategic transition with no reduction in its core investments (especially R&D), nor with a weakening of its financial stability. REVENUE For 2014, the geographical revenue split is: Europe, United Kingdom and South Africa: 69% (2013: 74%) North America: 31% (2013: 26%) In Europe, the largest contributing subsidiaries have been the United Kingdom ( 3.6m against 5.1m), Germany ( 1.3m against 1.8m), France ( 1.5m against 1.9m) and Ireland ( 1.7m against 2.1m). The Netherlands is now a significant contributor to the European total, with a jump from 108k to 1.2m. We have continued to add prestigious new references, especially in the U.S., with a first tranche of software investment in excess of $1m from one of the leading financial institutions. Our market penetration in the SAP market is still increasing and is still a priority target. The revenue mix for 2014 is summarized as follows: - Product (licence/maintenance): 50% (2013: 48%) - Training services: 50% (2013: 52 %) 1

4 CHAIRMAN S STATEMENT (continued) INCOME STATEMENT The EBITDA for the year ended 31 December 2014 was 452,819 against 567,850 for Our EBITDA percentage was 2.7% in 2014 against 2.9% in As underlined by the positive evolution of our operational cash flow in 2014, it is important to state that our accounting policy for Research and Development capitalisation and amortisation has barely any impact on EBITDA, one nearly cancelling off the other, which has been the case in past years. (R&D capitalisation for 2014 was: 772,244 (2013: 807,239) while R&D amortisation for 2014 was: 791,790 (2013: 713,564). The level of amortisation in 2014 has increased by 1% to 1,094,739 and Depreciation has decreased to 189,655k (against 251,860 in 2013). DIVIDENDS An interim dividend was declared and paid in July 2014 of 1 euro cent per share (representing a total cost of Euro 83K), as in 2013 and SHARE BUY-BACK Assima Plc is listed on Alternext/Euronext (ALSIM) with 3,210,738 shares on the Euroclear register out of a total of 8,209,738 shares. Every year the board and the shareholders in AGM vote for a yearly share buy-back plan to provide a minimum of liquidity. As of December , Assima held 48,481 treasury shares, including 14,981 purchased on the market in These Treasury Shares will be cancelled in 2015 after confirmation of the operation at the next AGM FORECASTS As stated in the summary, Assima is undergoing a major transition impacting its business model and 2014 have been negatively impacted through that process but we expect 2015 to bring back Assima on its historic trend of growth and profitability. This is why, for the new fiscal exercise, we have two major targets: exceed 20m in consolidated revenue (cancelling two years of decline), and reaching 15% of Ebitda. We aim to achieve this with a significant contribution from our U.S. operations where we have invested significantly in 2014 in new sales and marketing resources. This should give us the benefit of the strength of the U.S. Dollar, both against the GBP and the Euro. Michel Balcaen Chairman 22 April

5 STRATEGIC REPORT BUSINESS REVIEW In the year ended 31 December 2014 revenue has decreased by 10.7% from 19,401,666 to 17,326,868. For 2014, the geographical revenue split is: Europe and United Kingdom: 69% (2013: 74%) North America: 31% (2013: 26%) In Europe, the largest contributing subsidiaries have been the United Kingdom ( 3.6m against 5.1m), Germany ( 1.3m against 1.8m), France ( 1.5m against 1.9m) and Ireland ( 1.7m against 2.1m). RISKS Liquidity risk At 31 December 2014 the consolidated cash position was 2,493,768. There is currently no procedure to centralise and manage cash by a treasury manager. The available cash is managed by subsidiary Financial Controllers under supervision of the Country General Manager and who together decide the optimum use of available cash. Country General Managers must respect the group policy which is to only invest for short periods (mainly on a monthly base) and only on monetary funds bearing no risk on capital. A consolidated cash analysis report for the group is prepared monthly by the CFO and reviewed with the Chairman. Assima Plc has provided banking guarantees to several subsidiaries to facilitate negotiation of local credit lines. The amount of credit and covenants vary from country to country. The credit lines are only available for funding operations and not for investments. Assima UK Limited has negotiated a factoring facility of 500,000 from NatWest Bank (Due to revenue concentration the maximum value of this facility may not be available) The group is fundamentally cash generative; therefore we do not anticipate the need for additional credit facilities in the foreseeable future to support our existing operations. Interest rate risk The company, nor any of its subsidiaries, has any debt subject to rate indexation. Hence there is no major impact on our finances from potential rate variations. The only impact could be on the cost of the invoice discounting facilities but this would be marginal. Currency risk The company has not implemented a specific policy to protect against currency fluctuations. The fact that the group is trading in the three main international currencies could have a negative impact on future results. M Balcaen Director 22 April

6 DIRECTORS REPORT The directors present their annual report together with the audited financial statements for the year ended 31 December PRINCIPAL ACTIVITY The principal activity of the group in the year was to develop and distribute productivity software for training, support and translation of or on ERP applications such as Oracle or SAP, and to deliver related consultancy services. RESULTS AND DIVIDENDS The results of the group for the year ended 31 December 2014 and the financial position at the year-end are set out in the income statement and balance sheet on pages 8 and 9 respectively. An interim dividend has been declared and paid in 2014 of 1 euro cent per share, representing a total cost of 83,839 ( 64,366) (2013: 83,839 ( 69,919). DIRECTORS The directors who held office at 31 December 2014 were as follows: A D Coates E Duneau J Forwood M Balcaen COMPANY SECRETARY R Anderson SUBSTANTIAL SHAREHOLDINGS The Directors are aware of the following substantial shareholdings in the company: Ordinary shares of 0.01 each 31 December December 2013 Number of Number of shares Per cent shares Per cent M Balcaen* 3,968, ,968, E Duneau 1,750, ,750, Innovacom Gestion SAS 1,723, ,723, X-Ange Private Equity 285, , Turenne Capital 251, , * M Balcaen s shares are beneficially held by Klimt Invest SOPARFI, registered in Luxembourg, of which he is the sole beneficiary. The total includes shares held by WizArt Invest SOPARFI, fully owned by Klimt Invest since 14 January CHARITABLE AND POLITICAL DONATIONS The group made no charitable or political contributions during the year. SUPPLIER PAYMENT POLICY It is the group s policy to agree the terms of payment with suppliers when arranging the terms of the transaction to ensure that both parties are aware of these terms. Trade creditors at the year-end amount to approximately 51 days (2013: 48 days) of average suppliers for the period. 4

7 DIRECTORS REPORT (continued) STATEMENT OF DIRECTORS RESPONSIBILITIES The Directors are responsible for preparing the group and parent company financial statements in accordance with applicable law and regulations. Company law requires the directors to prepare group and parent company financial statements for each financial year. Under that law the directors are required to prepare the group financial statements in accordance with International Financial Reporting Standards ( IFRS ) as adopted by the EU. The group financial statements are required by law and IFRSs as adopted by the EU to present fairly the financial position and performance of the group; the Companies Act 2006 provides in relation to such financial statements that references in the relevant part of that Act to financial statements giving a true and fair view are references to their achieving a fair presentation. The parent company financial statements are required by law to give a true and fair view of the state of affairs of the parent company. In preparing each of the group and parent company financial statements the Directors are required to: select suitable accounting policies and apply them consistently; make judgements and estimates that are reasonable and prudent; for the group and parent company financial statements, state whether they have been prepared in accordance with IFRSs as adopted by the EU; prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group and the parent company will continue in business. The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the parent company and to enable them to ensure that the financial statements comply with the Companies Act They have general responsibility for taking such steps as are reasonably open to safeguard the assets of the group and to prevent and detect fraud and other irregularities. Under applicable law and regulations, the Directors are also responsible for preparing a Director s Report to comply with that law and those regulations. In determining how amounts are presented within terms in the profit and loss account and balance sheet, the Directors have had regard to the substance of the reported transaction or arrangement, in accordance with generally accepted accounting principles or practice. So far, as each of the Directors is aware at the time the report is approved: there is no relevant audit information of which the company's auditors are not aware of ; and the Directors have taken all steps that they ought to have taken to make themselves aware of any relevant audit information and to establish that the auditors are aware of that information. GOING CONCERN After making enquiries, the Directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. STRATEGIC REPORT The group strategic report includes information regarding the group s principal risks and uncertainties, and future plans. 5

8 DIRECTORS REPORT (continued) AUDITORS The company s auditors, haysmacintyre, have expressed a willingness to continue in office and a resolution reappointing them will be proposed at the Annual General Meeting in accordance with Section 485 of the Companies Act SIGNED ON BEHALF OF THE BOARD ON 22 APRIL 2015 M Balcaen Director Registered Office 1 Ropemaker Street London EC2Y 9AW 6

9 INDEPENDENT AUDITORS REPORT TO THE SHAREHOLDERS OF ASSIMA PLC We have audited the financial statements of Assima Plc for the year ended 31 December 2014 which comprise the Consolidated Income Statement, the Consolidated and Company Statement of Changes in Shareholders Equity, the Consolidated and Company Balance Sheets, the Consolidated and Company Cash Flow Statements and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union and, as regards the parent company financial statements, as applied in accordance with the provisions of the Companies Act This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an Auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed. Respective responsibilities of directors and auditors As explained more fully in the Directors Responsibilities Statement set out on page 5, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board s Ethical Standards for Auditors. Scope of the audit of the financial statements A description of the scope of an audit of financial statements is provided on the Financial Reporting Council's website at Opinion on financial statements In our opinion: the financial statements give a true and fair view of the state of the group s and of the parent company s affairs as at 31 December 2014 and of the group s loss for the year then ended; the group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union; and the parent company financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union and as applied in accordance with the provisions of the Companies Act 2006; and the financial statements have been prepared in accordance with the requirements of the Companies Act 2006 and, as regards the group financial statements, Article 4 of the IAS Regulation. Opinion on other matter prescribed by the Companies Act 2006 In our opinion the information given in the Strategic Report and the Directors Report for the financial year for which the financial statements are prepared is consistent with the financial statements. Matters on which we are required to report by exception We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion: adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or the parent company financial statements are not in agreement with the accounting records and returns; or certain disclosures of directors remuneration specified by law are not made; or we have not received all the information and explanations we require for our audit. Andrew Ball (Senior statutory auditor) for and on behalf of haysmacintyre, Statutory Auditor 26 Red Lion Square London WC1R 4AG 22 April

10 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME Note REVENUE 2 17,326,868 19,401,666 Cost of sales 3 (12,767,604) (14,577,602) GROSS PROFIT 4,559,264 4,824,064 Administrative expenses (4,106,445) (4,256,214) Amortisation 10 (1,094,739) (1,016,513) Depreciation 11 (189,655) (251,860) OPERATING LOSS (831,575) (700,523) Net finance expense 5 (26,310) (26,013) LOSS BEFORE TAX 2 (857,885) (726,536) Tax charge 6 (131,619) (210,491) LOSS FOR THE YEAR (989,504) (937,027) LOSS FOR THE YEAR ATTRIBUTABLE TO: Equity holders of the parent company (642,804) (839,580) Non-controlling interests (346,700) (97,447) LOSS FOR THE YEAR (989,504) (937,027) OTHER COMPREHENSIVE INCOME Translation difference on overseas operations (260,459) 47, TOTAL COMPREHENSIVE LOSS FOR THE YEAR (1,249,963) (889,061) ============= =========== ATTRIBUTABLE TO: Equity holders of the parent company (903,263) (791,614) Non-controlling interests (346,700) (97,447) TOTAL COMPREHENSIVE LOSS FOR THE YEAR (1,249,963) (889,061) ============== =========== LOSS PER SHARE ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT COMPANY Basic and diluted 24 (11.00p) (9.64p) =========== ========== All turnover and profit is derived from continuing operations. The accompanying accounting policies and notes form an integral part of these financial statements. 8

11 CONSOLIDATED BALANCE SHEET AT 31 DECEMBER 2014 COMPANY NO: Note ASSETS Non-current assets Goodwill 9 5,422,643 5,408,509 Intangible assets 10 5,058,220 5,464,440 Property, plant and equipment , ,073 Deferred tax assets , , ,917,265 11,488, Current assets Trade and other receivables 14 6,641,672 8,960,601 Current tax assets 60,605 58,288 Cash and cash equivalents 15 2,493,768 2,230, ,196,045 11,249, ,113,310 22,737,921 ============== ============== EQUITY Capital and reserves attributable to the company s equity shareholders Called up share capital 16 82,097 82,097 Capital redemption reserve 3,353 3,353 Share premium account 10,794,543 10,794,543 Other reserve (155,378) (106,012) Retained earnings 1,586,824 2,293,994 Foreign exchange reserve 98, ,294 Non-controlling interest (272,666) 67, Total equity 12,137,608 13,495, LIABILITIES Non-current liabilities Loans and borrowings , ,424 Deferred tax liabilities , , ,124,787 1,010, Current liabilities Loans and borrowings , ,881 Trade and other payables 19 6,618,080 7,338,574 Current tax liabilities 116, , ,850,915 8,232, Total liabilities 2 7,975,702 9,242, Total equity and liabilities 20,113,310 22,737,921 ============== ============== The financial statements were approved and authorised for issue by the Board of Directors on 22 April 2015 and were signed below on its behalf by: M Balcaen Director The accompanying accounting policies and notes form an integral part of these financial statements. 9

12 PARENT COMPANY BALANCE SHEET AT 31 DECEMBER 2014 COMPANY NO: Note ASSETS Non-current assets Intangible assets 10-19,808 Property, plant and equipment , ,768 Investments 12 8,937,569 8,902,284 Loans Receivable , ,995,741 9,118, Current assets Trade and other receivables 14 2,151,145 2,150,718 Cash and cash equivalents , , ,544,602 2,460, ,540,343 11,578,959 ============= ============== EQUITY Capital and reserves attributable to the company s Equity shareholders Called up share capital 16 82,097 82,097 Capital redemption reserve 3,353 3,353 Share premium account 10,794,543 10,794,543 Other reserve (155,378) (106,012) Retained earnings 1,406,617 (344,818) Total equity 12,131,232 10,429, LIABILITIES Non-current liabilities Loans and borrowings 18 44, , , ,279 Current liabilities Loans and borrowings 18 73,667 73,667 Trade and other payables , , ,854 1,034, Total liabilities 409,111 1,149, Total equity and liabilities 12,540,343 11,578,959 ============== ============== The financial statements were approved and authorised for issue by the Board of Directors on 22 April 2015 and were signed below on its behalf by: M Balcaen Director The accompanying accounting policies and notes form an integral part of these financial statements. 10

13 CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS EQUITY Share Capital Capital Redemption reserve Share premium Other reserve Retained earnings Retained Earnings) Foreign exchange reserve Noncontrolling Interest Balance at 1 January ,839 1,611 10,794,543 (362,462) 4,062, , ,517 15,188,421 Total comprehensive income (839,580) 47,966 - (791,614) Dividends paid (69,919) - - (69,919) Cancellation of share capital (1,742) 1, (713,675) - - (713,675) Net movement in treasury , ,450 shares Minority interest for the year (97,447) (97,447) Dividends paid to Minority Shareholders (144,877) - (144,877) (289,754) Currency Translation on Minority interest ,574 12, Balance at 31 December ,097 3,353 10,794,543 (106,012) 2,293, ,294 67,767 13,495,036 Total comprehensive income (642,804) (260,459) - (903,263) Dividends paid (64,366) - - (64,366) Net movement in treasury (49,366) (49,366) shares Minority interest for the year (346,700) (346,700) Currency Translation on minority interest ,267 6, Balance at 31 December ,097 3,353 10,794,543 (155,378) 1,586,824 98,835 (272,666) 12,137,608 ======== ======== =========== ============= ============= ========== =========== ============= A description of the nature of each reserve within shareholders equity is provided in Note 26. Total PARENT COMPANY STATEMENT OF CHANGES IN SHAREHOLDERS EQUITY Share Capital Capital Redemption reserve Share Premium Other Reserve Retained Earnings Total Balance at 1 January ,839 1,611 10,794,543 (362,462) 1,184,516 11,702,047 Total comprehensive income (745,740) (745,740) Dividends paid (69,919) (69,919) Cancellation of share capital (1,742) 1, (713,675) (713,675) Net movement in treasury shares , , Balance at 31 December ,097 3,353 10,794,543 (106,012) (344,818) 10,429,163 Total comprehensive income ,815,801 1,815,801 Dividends paid (64,366) (64,366) Net movement in treasury shares (49,366) - (49,366) Balance at 31 December ,097 3,353 10,794,543 (155,378) 1,406,617 12,131,232 ========== ========= ============ =========== =========== ============= A description of the nature of each reserve within shareholders equity is provided in Note 26. The accompanying accounting policies and notes form an integral part of these financial statements. 11

14 CONSOLIDATED CASH FLOW STATEMENT Note Cash flows from operating activities Loss for the year (989,504) (937,027) Adjustments for: Tax charge 6 131, ,491 Loss on the sale of fixed assets 14,891 3,260 Finance expenditure 5 26,310 26,013 Depreciation and amortisation 2 1,284,395 1,268,373 Decrease/(increase) in trade and other receivables 2,318,928 1,306,096 Decrease in trade and other payables (720,494) (1,510,707) Cash generated from operations 2,066, ,499 Tax paid (498,055) (106,202) Net cash generated from operating activities 1,568, , Cash flows from investing activities Purchases of property, plant and equipment (60,527) (158,155) Proceeds from sale of property, plant and equipment 25,462 33,067 Purchases of intangible assets 9, 10 (807,529) (822,962) Net interest paid 5 (26,310) (26,013) Net cash used in investing activities (868,906) (974,063) Cash flows from financing activities Net purchase of treasury shares (49,366) (457,226) Net repayment of finance lease creditors 25,076 (32,648) Dividends paid to subsidiary minority interest - (280,137) Dividends paid to company s shareholders (64,366) (69,919) Net cash used in financing activities (88,656) (839,930) Net increase/(decrease) in cash and bank overdrafts 610,529 (1,553,696) Exchange rate differences (148,539) 40,522 Cash and cash equivalents at beginning of year 2,031,778 3,544, Cash and cash equivalents at end of year 2,493,768 2,031,778 ============ =========== RECONCILIATION OF NET CASH FLOW TO NET FUNDS 2014 Increase in cash in the year 610,529 Exchange rate differences (148,539) Movement in net funds in the year 461,990 Net funds at beginning of year 2,031, Net funds at end of year 2,493,768 ============= The accompanying accounting policies and notes form an integral part of these financial statements. 12

15 PARENT COMPANY CASH FLOW STATEMENT Note Year to 31 Year to 31 December 2014 December 2013 Cash flows from operating activities Profit/(Loss) for the period 1,815,801 (745,740) Adjustments for: Tax credit - (14,411) Finance income 28,615 27,809 Finance expense (23,675) (28,956) Dividends received from subsidiary undertakings (1,963,563) (106,146) Depreciation and amortisation 101, ,031 (Increase)/Decrease in trade and other receivables (943,251) 475,573 (Decrease)/Increase in trade and other payables (667,852) 724, Cash (used in)/generated from operations (1,652,696) 496,118 Tax receipts - 25, Net cash (used in)/generated from operating activities (1,652,696) 521, Cash flows from investing activities Dividends received from subsidiary undertakings 1,963, ,146 Investment in subsidiary 12 (35,285) (15,723) Finance income (28,615) (27,809) Finance expense 23,675 28, Net cash generated from investing activities 1,923,338 91, Cash flows from financing activities Net purchase of treasury shares (49,366) (457,226) Dividends paid to company s shareholders (64,336) (69,919) Repayment of finance lease creditors (72,836) (68,889) Net cash used in financing activities (186,568) (596,034) Net increase in cash and bank overdrafts 84,074 17,503 Cash and bank overdrafts at beginning of year 309, , Cash and bank overdrafts at end of year 393, ,381 =========== ========== RECONCILIATION OF NET CASH FLOW TO NET FUNDS 2014 Increase in cash in the year 84, Movement in net funds in the year 84,074 Net funds at beginning of year 309, Net funds at end of year 393,455 ========== The accompanying accounting policies and notes form an integral part of these financial statements. 13

16 NOTES TO THE FINANCIAL STATEMENTS 1. ACCOUNTING POLICIES (i) Basis of accounting These financial statements have been prepared in accordance with those IFRS standards and IFRIC interpretations issued and effective or issued and early adopted as at the time of preparing these statements (April 2015). The policies set out below have been consistently applied to all the years presented. These financial statements have been prepared under the historical cost convention, and posted in United Kingdom Sterling. The group has reasonable financial resources together with long term contracts with a number of customers across different geographic areas. As a consequence, the directors believe that the group is well placed to manage its business risks successfully despite the current uncertain economic conditions. After making enquiries, the directors have a reasonable expectation that the company and the group have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the annual report and accounts. (ii) Basis of consolidation The Group financial statements consolidate the accounts of the company and its subsidiary undertakings made up to 31 December As provided by section 408 of the Companies Act 2006, a separate income statement for the parent company has not been presented. All intercompany balances and transactions have been eliminated in full. Subsidiary undertakings are accounted for from the effective date of acquisition until the effective date of disposal. (iii) Segment reporting The company has three reportable business operations which are: a) The provision of change management and education support services for companies undergoing complex business or technological change. b) The licensing of change management and education support software. c) The ongoing maintenance of the software solutions licensed to companies. Segmental reporting is produced on a geographical basis by place of sale and by revenue source. (iv) Revenue recognition Revenue comprises the fair value of the sale of software and services, net of value added tax, rebates and discounts. Revenue is recognised when the group has a right to that income, the transfer of risks to the customer has taken place and that income can be reliably measured. Service income is recognised in the period in which the service is performed. Licence income is recognised when the licence has been transferred to the customer. Maintenance income is recognised evenly over the contractual maintenance period. Where maintenance income is invoiced before the period to which it relates it is deferred accordingly. (v) Property, plant and equipment Property, plant and equipment are stated at cost less depreciation. Depreciation is calculated to write down the cost of all tangible fixed assets by equal monthly instalments over their estimated useful lives at the following rates- Furniture, fittings and equipment - 15% to 33% straight line Leased assets over the life of the lease (vi) Goodwill and business combinations Business combinations on or after 1 January 2004 are accounted for under IFRS 3 ( Business combinations ) using the purchase method. Any excess of the cost of business combinations over the group s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities is recognised in the balance sheet as goodwill and is not amortised. 14

17 1. ACCOUNTING POLICIES (continued) (vi) Goodwill and business combinations (continued) After initial recognition, goodwill is not amortised but is stated at cost less any accumulated impairment loss, with the carrying value being reviewed for impairment, at least annually and whenever events or changes in circumstances indicate that the carrying value may be impaired. For the purpose of impairment testing, goodwill is allocated to the related cash generating units monitored by management. Where the recoverable amount of the cash generating unit is less than its carrying amount, including goodwill, an impairment loss is recognised in the income statement. Intangible assets are tested annually for impairment and other non-current assets are tested where an indication of impairment arises. The assessment of impairment is made by comparing the carrying amount of cash generating units (including any associated goodwill) to the higher of their value in use and their fair value. Value in use represents the net present value of future discounted cash flows. Any impairment of non-current assets are recognised in the income statement and as above, are reviewed for impairment. (vii) Intangible fixed assets Intangible fixed assets are stated at cost less amortisation less impairment losses. Amortisation, where appropriate, is calculated to write down the cost of intangible fixed assets by equal monthly instalments over their estimated useful lives at the following rates- Brand names - 20% straight line Intellectual property (Assima UK) - 25% straight line Intellectual property (others) - 10% straight line Development costs - 25% straight line At present, customer lists are not being amortised as they are deemed to have an indefinite useful economic life due to the group s history of retaining and generating recurring sales from these customers. (viii) Foreign currencies Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the balance sheet date. The group has a number of different functional currencies including Sterling, Canadian Dollar, Danish Kroner, Euro, South African Rand, Swiss Franc and US Dollar. The exchange rates used at 31 December 2014 were 1 = CAN$1.823, 1 = DK9.298, 1 = 1.247, 1 = ZAR , 1 = CHF1.512 and 1 = US$ (ix) Operating lease agreements Rentals applicable to operating leases where substantially all of the benefits and risks of ownership remain with the lessor are charged to profit and loss account as incurred. (x) Leased assets Where substantially all of the risks and rewards incidental to ownership of a leased asset have been transferred to the Group (a "finance lease"), the asset is treated as if it had been purchased outright. The amount initially recognised as an asset is the lower of the fair value of the leased asset and the present value of the minimum lease payments payable over the term of the lease. The corresponding lease commitment is shown as a liability. Following initial recognition lease payments are split between capital and interest. The interest element is charged to the consolidated statement of comprehensive income over the period of the. The capital element of each lease payment reduces the balance owed to the lessor 15

18 1. ACCOUNTING POLICIES (continued) (xi) Deferred taxation Deferred tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying values in the financial statements. The deferred tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction, other than a business combination, that at the time of the transaction does not affect either the accounting or taxable profit or loss. Deferred tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled. Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which temporary differences can be utilised. (xii) Trade and other receivables Trade and other receivables are recognised and carried at original invoice value less an allowance for any uncollectible amounts. An estimate for doubtful debts is made when collection of the full amount is no longer probable. Bad debts are written off when identified. (xiii) Investments Investments in subsidiary undertakings are stated at cost less provisions for impairment. (xiv) Cash and cash equivalents Cash and cash equivalents includes cash in hand, deposit held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the balance sheet. (xv) Key sources of estimation uncertainty The preparation of financial statements requires management and the Board of Directors to make estimates and judgments that affect reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. These estimates are based on historical experience and various other assumptions that management and the Board believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions, significantly impacting earnings and financial position. Management believes that the following areas, all of which are discussed and separately marked in the respective sections of Note 1 Accounting Policies, comprise the most difficult, subjective or complex judgments it has to make in the preparation of the financial statements: valuation of intangible and other non-current assets, deferred taxation, and collecting trade receivables. 16

19 2. SEGMENTAL ANALYSIS Service Maintenance and revenue Licence revenue Total Year ended 31 December 2014: Revenue Canada 178, , ,510 United Kingdom 1,645,097 1,950,241 3,595,338 Germany 1,304,038 17,593 1,321,631 Switzerland , ,319 US 1,806,700 2,914,487 4,721,187 Denmark 926, ,225 1,331,197 Ireland 1,717,827-1,717,827 Spain 103, , ,847 France 318,197 1,163,275 1,481,472 South Africa 180, , ,408 Netherlands 471, ,480 1,213, ,653,082 8,673,786 17,326,868 ============ ============ ============== Operating profit Canada 345,137 United Kingdom Parent company (474,030) United Kingdom operations 700,725 Germany (645,440) Switzerland (3,793,981) US 1,225,670 Denmark 263,870 Ireland 110,234 Spain 187,809 France 809,345 Luxembourg (30,555) South Africa 110,345 Netherlands 359, (831,575) Net finance income (26,310) Profit before taxation ( 857,885) =========== 17

20 2. SEGMENTAL ANALYSIS (continued) Capital Depreciation and expenditure Amortisation Capital expenditure, depreciation and amortisation Year ended 31 December 2014 Canada 3,967 1,082 United Kingdom 2, ,150 Germany 541 6,917 Switzerland 688, ,245 US 1,853 12,484 Denmark 9,795 20,824 Ireland 2,837 36,370 Spain 327 6,604 France 29,308 34,139 South Africa 7,739 10,170 Assima Netherlands 1, ,044 1,248,395 =========== ============ At 31 December 2014 Assets Liabilities Net assets Canada 342, , ,226 United Kingdom 2,282, ,532 1,550,076 Germany 282,672 1,259,464 (976,792) Switzerland 2,331,171 1,380, ,386 US 4,112,351 1,547,571 2,564,780 Denmark 1,842, ,480 1,351,964 Ireland 1,956, ,388 1,634,505 Spain 329,354 88, ,389 France 5,956,856 1,740,700 4,216,156 Luxembourg 433,678 6, ,183 South Africa (3,920) 110,391 (114,311) Netherlands 247,077 91, , ,113,310 7,975,702 12,137,608 ============== ============= ============== Service Maintenance and revenue Licence revenue Total Year ended 31 December 2013: Revenue Canada 96, , ,056 United Kingdom 2,383,879 2,683,893 5,067,772 Germany 1,851,948-1,851,948 Switzerland (88,196) 1,099,271 1,011,075 US 1,786,480 3,181,526 4,968,006 Denmark 654, ,353 1,286,118 Ireland 2,098,715 13,587 2,112,302 Spain 19, , ,815 France 330,528 1,558,571 1,889,099 South Africa 66, , ,192 Netherlands 89,333 18, , ,290,913 10,110,753 19,401,666 ============ ============== ============== 18

21 2. SEGMENTAL ANALYSIS (continued) Operating profit Canada 199,277 United Kingdom Parent company (1,554,323) United Kingdom operations 1,314,394 Germany (244,617) Switzerland (2,648,575) US 1,134,404 Denmark 145,419 Ireland 247,364 Spain 108,197 France 690,802 Luxembourg (13,674) South Africa 152,146 Netherlands (231,337) (700,523) Net finance income (26,013) Profit before taxation ( 726,536) ============ Capital Depreciation and expenditure Amortisation Capital expenditure, depreciation and amortisation Year ended 31 December 2013 Canada - 1,222 United Kingdom 270, ,643 Germany 15,617 12,561 Switzerland 807, ,945 US ,592 Denmark 2,395 38,550 Ireland 30,255 39,062 Spain - 7,095 France 93,542 41,400 South Africa 2,436 18,303 Assima Netherlands ,223,228 1,268,373 ============ ============= 19

22 2. SEGMENTAL ANALYSIS (continued) Assets Liabilities Net assets At 31 December 2013 Canada 295, , ,763 United Kingdom 3,589,262 1,102,907 2,486,355 Germany 663,951 1,380,878 (716,927) Switzerland 2,607,862 1,509,388 1,098,474 US 4,740,426 2,003,552 2,736,874 Denmark 2,029, ,159 1,297,594 Ireland 2,019, ,041 1,599,206 Spain 222,500 27, ,670 France 5,910,334 1,629,546 4,280,788 Luxembourg 418,648 2, ,966 South Africa 72, ,196 (89,029) Netherlands 168,022 86,720 81, ,737,921 9,242,885 13,495,036 ============== ============= ============= 20

23 3. COST OF SALES Wages, salaries and associated expenditure 10,481,261 10,970,327 Subcontractor labour 2,069,183 3,159,852 Other 217, , ,767,604 14,577,602 ============= ============= 4. EXPENSES BY NATURE Employee benefit expense (see below) 10,603,800 11,681,946 Depreciation 189, ,860 Amortisation 1,094,739 1,016,513 Operating lease rentals 363, ,041 Exchange loss/(gain) 9,311 19,382 Auditors remuneration - audit fees 31,500 30,000 - auditing of accounts of subsidiaries of the company pursuant to legislation 30,000 28,250 - other services relating to taxation 3,500 3,500 ============== ============= Employee benefit expense (including directors) Wages and salaries 8,934,866 9,971,274 Social security costs 1,406,994 1,429,132 Pension contributions 261, , ,603,800 11,681,946 ============== ============== The average number of persons (including directors) employed by the group during the year was as follows: Office and administration ==== ==== Key management remuneration Salaries 420, ,000 =========== =========== The key management figure includes only directors. The highest paid director received 120,000 (2013: 120,000) in annual remuneration. 21

24 5. NET FINANCE EXPENSE Interest receivable and similar income 1,173 2,216 Interest payable and other charges (16,517) (17,914) Finance lease interest paid (10,966) (10,315) (26,310) (26,013) ========== ========== 6. TAXATION (a) The taxation charge comprises: Corporation tax 131, , Current tax 11, ,445 Movement in deferred tax liability (note 17) 124,051 (113,489) Movement in deferred tax asset (3,891) 25, , ,491 =========== =========== (b) The tax assessed in the year is different from the standard rate of corporation tax in the United Kingdom of 21.49% in 2014 and 23.25% in The differences are explained below: Loss on ordinary activities before tax (857,885) (726,537) ========== ========== Loss on ordinary activities before tax multiplied by the standard companies rate of tax in the UK (224,398) (168,920) (c) Effects of: Capital allowances in excess of depreciation (15,660) (29,554) Expenditure not deductible for tax purposes 536, ,192 Expense adjustment Difference relating to overseas tax rates 116,258 (210,363) Tax credit relating to research and development (75,282) (75,264) Tax credit relating to competitive employment (15,912) (14,005) Utilisation of loss brought forward (12,076) (8,316) Losses carried forward 221, ,642 Marginal relief (9,349) - Adjustment to tax charge in respect of previous periods (25,212) 61,474 Deferred tax not recognized 191, ,758 Adjust closing deferred tax rate (2,272) (53,925) Income not taxable (554,123) (38,228) Taxation charge 131, ,491 ========== =========== Factors which may affect future tax charges Certain of the group companies have tax losses carried forward that may reduce future tax charges. 22

25 7. DIVIDENDS TO EQUITY SHAREHOLDERS Dividends paid 64,366 69,919 ========= ========= 8. PROFIT ATTRIBUTABLE TO ASSIMA PLC The profit after taxation for the financial year dealt with in the financial statements of the parent company, Assima Plc, was 1,815,801 (2013: loss 745,740). As permitted by section 408 Companies Act 2006, no separate income statement is presented for the parent company. 9. GOODWILL GROUP COST Purchased Consolidated goodwill goodwill Total At 1 January ,179 4,556,063 5,379,242 Additions - 15,724 15,724 Exchange rate difference 13,543-13, At 31 December ,722 4,571,787 5,408,509 Additions 35,285 35,285 Exchange rate difference (21,151) - (21,151) At 31 December ,571 4,607,072 5,422, NET BOOK VALUE At 31 December ,571 4,607,072 5,422,643 =========== ============= ============= At 31 December ,722 4,571,787 5,408,509 =========== ============= ============= Goodwill is not amortised, but tested annually for impairment with the recoverable amount being determined from value in use calculations. The key assumptions for the value in use calculations are those regarding the discount growth rates and changes in income and costs. 23