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Exhibit 99.1

Report of Independent Auditors

INDEPENDENT AUDITOR’S REPORT

To the board of directors and shareholders of Exony Limited

Report on the Financial Statements

We have audited the accompanying financial statements of Exony Limited which comprise the consolidated balance sheets as of September 30, 2013 and 2012, and the related consolidated statements of profit and loss, consolidated statement of total recognised gains and losses and cash flows for the years then ended and the related consolidated notes to the financial statements.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice); this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Management is also responsible for the preparation of the UK to US GAAP note to the financial statements.

Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America (US GAAS). Those standards require that we plan and perform the audit to obtain reasonable assurance about 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 judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Exony Limited as of September 30, 2013 and 2012, and the results of its operations and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United Kingdom.

Other matters

Accounting principles generally accepted in the United Kingdom vary in certain important respects from accounting principles generally accepted in the United States of America. Information relating to the nature and effect of such differences is presented in the United States Generally Accepted Accounting Principles section in note 24 to the financial statements.

Baker Tilly UK Audit LLP, Statutory Auditor

Reading, United Kingdom

October 14, 2014

 

 

 

 


EXONY LIMITED AND SUBSIDIARY COMPANY

CONSOLIDATED PROFIT AND LOSS ACCOUNTS

FOR THE YEARS ENDED 30 SEPTEMBER 2012 AND 2013

 

 

 

 

 

2013

 

 

2012

 

 

 

 

 

 

 

 

(restated)

 

 

Note

 

 

£

 

 

£

 

Group turnover

 

2

 

 

 

9,553,834

 

 

 

8,511,887

 

Cost of sales

 

 

 

 

 

(3,621,757

)

 

 

(3,184,620

)

Gross profit

 

 

 

 

 

5,932,077

 

 

 

5,327,267

 

Administrative expenses

 

 

 

 

 

(5,001,010

)

 

 

(4,865,308

)

Operating profit

 

3

 

 

 

931,067

 

 

 

461,959

 

Interest receivable

 

 

 

 

 

2,285

 

 

 

2,149

 

Interest payable and similar charges

 

6

 

 

 

(35

)

 

 

(80

)

Profit on ordinary activities before taxation

 

 

 

 

 

933,317

 

 

 

464,028

 

Tax on profit on ordinary activities

 

7

 

 

 

(64,523

)

 

 

78,305

 

Profit for the financial year

 

8

 

 

 

868,794

 

 

 

542,333

 

All of the activities of the group are classed as continuing.

The company has taken advantage of section 408 of the Companies Act 2006 not to publish its own Profit and Loss Account.

The notes on pages 6 to 17 form part of these financial statements.

 

 

 

-2-


EXONY LIMITED

CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS & LOSSES

FOR THE YEARS ENDED 30 SEPTEMBER 2012 AND 2013

 

 

Note

 

  

2013

£

 

 

2012

£

(restated)

 

Profit for the financial year

 

 

 

 

 

868,794

 

 

 

542,333

 

Exchange differences arising on consolidation of foreign subsidiary

 

 

 

 

 

(2,322

)

 

 

(2,287

)

Total recognised gains and losses relating to the period

 

 

 

 

 

866,472

 

 

 

540,046

 

Prior year adjustment

 

1

 

 

 

93,933

 

 

 

-

 

Total gains and losses recognised since the last annual report

 

 

 

 

 

960,405

 

 

 

540,046

 

The notes on pages 6 to 17 form part of these financial statements.

 

 

 

-3-


EXONY LIMITED

CONSOLIDATED BALANCE SHEETS

AT 30 SEPTEMBER 2012 AND 2013

 

 

 

 

 

2013

 

 

 

 

 

2012

 

 

 

 

 

 

 

 

 

 

 

(restated)

 

 

Note

 

 

£

 

 

£

 

 

£

 

 

£

 

Fixed assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tangible assets

 

9

 

 

 

 

 

 

 

54,660

 

 

 

 

 

 

 

49,137

 

Current assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Debtors

 

10

 

 

 

2,912,702

 

 

 

 

 

 

 

2,715,817

 

 

 

 

 

Cash at bank

 

 

 

 

 

3,870,219

 

 

 

 

 

 

 

2,693,566

 

 

 

 

 

 

 

 

 

 

 

6,782,921

 

 

 

 

 

 

 

5,409,383

 

 

 

 

 

Creditors: Amounts falling due within one year

 

12

 

 

 

(3,403,476

)

 

 

 

 

 

 

(3,141,186

)

 

 

 

 

Net current assets

 

 

 

 

 

 

 

 

 

3,379,445

 

 

 

 

 

 

 

2,268,197

 

Total assets less current liabilities

 

 

 

 

 

 

 

 

 

3,434,105

 

 

 

 

 

 

 

2,317,334

 

Creditors: Amounts falling due after more than one year

 

13

 

 

 

 

 

 

 

(535,357

)

 

 

 

 

 

 

(285,058

)

 

 

 

 

 

 

 

 

 

 

2,898,748

 

 

 

 

 

 

 

2,032,276

 

Capital and reserves

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Called-up share capital

 

18

 

 

 

 

 

 

 

5,049

 

 

 

 

 

 

 

5,049

 

Profit and loss account

 

19

 

 

 

 

 

 

 

2,893,699

 

 

 

 

 

 

 

2,027,227

 

Shareholders’ funds

 

20

 

 

 

 

 

 

 

2,898,748

 

 

 

 

 

 

 

2,032,276

 

The notes on pages 6 to 17 form part of these financial statements.

 

 

 

-4-


EXONY LIMITED

CONSOLIDATED CASH FLOW STATEMENTS

FOR THE YEARS ENDED 30 SEPTEMBER 2012 AND 2013

 

 

 

 

 

2013

 

 

 

 

 

2012

 

 

 

 

 

 

 

 

 

 

 

(restated)

 

 

Note

 

 

£

 

 

£

 

 

£

 

 

£

 

Net cash inflow from operating activities

 

21

 

 

 

 

 

 

 

1,315,449

 

 

 

 

 

 

 

643,514

 

Returns on investments and Servicing of finance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest received

 

 

 

 

 

2,285

 

 

 

 

 

 

 

2,149

 

 

 

 

 

Interest paid

 

 

 

 

 

(35

)

 

 

 

 

 

 

(80

)

 

 

 

 

Net cash inflow from returns on investments and servicing of finance

 

 

 

 

 

 

 

 

 

2,250

 

 

 

 

 

 

 

2,069

 

Taxation

 

 

 

 

 

 

 

 

 

(78,923

)

 

 

 

 

 

 

(32,995

)

Capital expenditure

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Payments to acquire tangible fixed assets

 

 

 

 

 

(55,817

)

 

 

 

 

 

 

(50,770

)

 

 

 

 

Receipts from sale of fixed assets

 

 

 

 

 

-

 

 

 

 

 

 

 

703

 

 

 

 

 

Net cash outflow from capital expenditure

 

 

 

 

 

 

 

 

 

(55,817

)

 

 

 

 

 

 

(50,067

)

Increase in cash

 

21

 

 

 

 

 

 

 

1,182,959

 

 

 

 

 

 

 

562,521

 

The accompanying notes are an integral part of these financial statements.

 

 

 

-5-


EXONY LIMITED

NOTES TO THE FINANCIAL STATEMENTS

1.

Accounting policies

Basis of accounting

The financial statements have been prepared under the historical cost convention, and in accordance with applicable accounting standards. No material uncertainties that may cast significant doubt on the ability of the company to continue to operate as a going concern have been identified by the directors and therefore the accounts have been prepared on a going concern basis.

Basis of consolidation

The consolidated financial statements incorporate the financial statements of the company and all group undertakings. These are adjusted, where appropriate, to conform to group accounting policies. As a consolidated profit and loss account is published, a separate profit and loss account for the parent company is omitted from the group financial statements by virtue of section 408 of the Companies Act 2006.

Prior year adjustment for change in accounting policies

In preparing the financial statements for the current year, the company has adopted FRS 20 ‘Share Based Payments’. FRS 20 ‘Share Based Payments’ requires the recognition of equity -settled share-based payments at fair value at the date of the grant at each balance sheet date. The standard has been applied retrospectively to all grants of equity instruments after 7 November 2002 that were unvested at 1 September 2011.

As this is a change in accounting policy this has been accounted for as a prior year adjustment. For the year ended 30 September 2012, this has resulted in a charge to the profit and loss account of £185,938. There was no impact to prior years as the options previously granted had fully vested.

A deferred tax asset in respect of the share options of £36,277 has been recognised as at 30 September 2012 and a national insurance accrual of £12,420.

Additional adjustments to reduce accruals by £70,076 due to the benefit of hindsight as at October 2014 have been made to the September 30, 2012 accounts.

The net impact on the prior year result was to reduce profits by £108,260 and increase net assets by £93,933.

Turnover

Turnover represents amounts receivable for goods and services net of VAT and trade discounts. The directors continue to believe that US GAAP provides the best and most prudent guidance for software revenue recognition. The relevant guidance for this is followed where it does not conflict with the principles in FRS 5, Application note G.

The company generates the following types of revenue:

Licence Fees: Licence fees are earned under software licence agreements to end users and resellers. Revenues from licences to end users are recognised upon shipment of the software if persuasive evidence of an arrangement exists, collection of the resulting receivables is reasonably assured, the fee is fixed and determinable, there are no significant post-delivery obligations and vendor-specific objective evidence (or fair value) for all elements exists. If an acceptance period is required, licence revenues are recognised upon the earlier of customer acceptance or the expiration of the acceptance period. Where implementation work is deemed essential to functionality, licence revenue is recognised over the period the services are delivered on a contract accounting basis.

Service Fees: Service revenue is recognised as the work is performed. Income from maintenance agreements is recognised on a straight line basis, over the period to which the agreement relates.

Tangible fixed assets

Tangible fixed assets are stated at cost, being the purchase price less accumulated depreciation.

 

 

 

-6-


EXONY LIMITED

NOTES TO THE FINANCIAL STATEMENTS

 

1.

Accounting policies (continued)

Depreciation

Depreciation is calculated so as to write off the cost of an asset, net of anticipated disposal proceeds, over the useful economic life of that asset as follows:

 

Leasehold Property

-

Over the life of the lease

Plant & Machinery

-

Over 2 years on a straight line basis

Fixtures & Fittings

-

Over 2 years on a straight line basis

Operating lease agreements

Rentals applicable to operating leases where substantially all of the benefits and risks of ownership remain with the lessor are charged against profits on a straight line basis over the period of the lease.

Pension costs

The company operates a defined contribution pension scheme and the pension charge represents the amounts payable by the company to the fund in respect of the year. The assets of the scheme are held separately from those of the company in an independently administered fund.

Deferred taxation

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date, where transactions or events that result in an obligation to pay more or a right to pay less tax in the future, or a right to receive repayments of tax.

Deferred tax assets are recognised only to the extent that the directors consider it more likely than not that there will be suitable taxable profits from which the future reversal of the underlying timing differences can be deducted. Deferred tax assets and liabilities recognised have not been discounted.

Share-based payments

In accordance with FRS 20 “Share-based payment”, the company reflects the economic cost of awarding share options to employees by recording an expense in respect of the services received from employees in the profit and loss account at an amount equal to the fair value of the awarded options. All share-based payments are equity settled.

Fair value is measured using the Black-Scholes option pricing model taking into account the following inputs:

- the exercise price of the option;

- the life of the option;

- the market price on the date of the grant of the option;

- the expected volatility of the share price;

- the dividends expected on the shares; and

- the risk free interest rate for the life of the option.

The expected life used in the model has been adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations.

The expense is spread over the period in which the services are received by the company (“the vesting period”). An assessment of the number of share options which are expected to vest is made at the end of each reporting period and any adjustments to the expected charge relating to those share options are made in the current period.

-7-


EXONY LIMITED

NOTES TO THE FINANCIAL STATEMENTS

 

1.

Accounting policies (continued)

Share-based payments (continued)

Options granted to employees of subsidiary companies are issued by the ultimate parent company and no consideration is given. Therefore the benefit to the subsidiary is treated as a capital contribution and added to the cost of the investment in the subsidiary.

Financial instruments

Financial instruments are classified and accounted for, according to the substance of the contractual arrangement, as either financial assets, financial liabilities or equity instruments. An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities.

Investments

Investments are stated at cost less any provision for diminution in value.

Research and development

Expenditure in respect of research and development is written off in the period in which it is incurred.

Foreign currencies

Foreign currency transactions are initially recorded at the exchange rate ruling at the date of the transaction. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at exchange rates ruling at the balance sheet date of monetary assets and liabilities denominated in foreign currencies are recognised in the profit and loss account within operating profit. Where there are related or matching forward contracts in respect of trading transactions, the rates of exchange specified in those contracts will be used.

Items included in the financial statements of the subsidiary are measured using the currency of the primary economic environment in which the entity operates (the functional currency). The profit and loss statement of the non-sterling denominated subsidiary is translated to sterling (the Group’s presentation currency) at average rates of exchange in each period. Assets and liabilities of the undertaking are translated at rates of exchange ruling at the balance sheet date. The differences between retained profits and losses translated at average and closing rates are taken to reserves, as are differences arising on the retranslation to sterling of non-sterling denominated Group entity net assets at the beginning of the year.

2.

Turnover

The turnover and profit before tax are attributable to the one principal activity of the group.

An analysis of turnover is given below:

 

 

2013

 

 

2012

 

 

£

 

 

£

 

United Kingdom

 

752,440

 

 

 

766,070

 

Overseas

 

8,801,394

 

 

 

7,745,817

 

 

 

9,553,834

 

 

 

8,511,887

 

-8-


EXONY LIMITED

NOTES TO THE FINANCIAL STATEMENTS

 

3.

Operating profit

Operating profit is stated after charging:

 

 

2013

 

 

2012

 

 

£

 

 

£

 

Operating lease costs

 

92,000

 

 

 

94,000

 

Depreciation of owned fixed assets

 

48,738

 

 

 

35,094

 

Loss on disposal of fixed assets

 

1,566

 

 

 

744

 

Research and development expenditure

 

862,093

 

 

 

600,775

 

Auditor’s remuneration – audit of group financial statements

 

19,600

 

 

 

19,300

 

Auditor’s remuneration – other fees

 

 

 

 

 

 

 

Taxation services

 

17,700

 

 

 

29,350

 

Payroll services

 

2,650

 

 

 

2,650

 

4.

Particulars of employees

The average number of staff employed by the group during the financial year amounted to:

 

 

2013

 

 

2012

 

 

No

 

 

No

 

Sales, marketing and technical

 

59

 

 

 

51

 

Administrative and finance

 

7

 

 

 

7

 

 

 

66

 

 

 

58

 

The aggregate payroll costs of the above were:

 

 

2013

 

 

2012

 

 

 

 

 

(restated)

 

 

£

 

 

£

 

Wages and salaries

 

4,658,382

 

 

 

4,305,523

 

Social security costs

 

435,352

 

 

 

366,131

 

Other pension costs

 

353,286

 

 

 

223,555

 

Equity-settled share-based payments

 

 

 

 

185,938

 

 

 

5,447,020

 

 

 

5,081,147

 

5.

Directors’ remuneration

The directors’ aggregate remuneration in respect of qualifying services were:

 

 

2013

 

 

2012

 

 

£

 

 

£

 

Remuneration receivable

 

568,531

 

 

 

474,116

 

Value of company pension contributions to money purchase schemes

 

86,934

 

 

 

61,609

 

 

 

655,465

 

 

 

535,725

 

Remuneration of highest paid director

 

 

2013

 

 

2012

 

 

£

 

 

£

 

Remuneration receivable

 

224,663

 

 

 

191,719

 

Value of company pension contributions to money purchase schemes

 

11,428

 

 

 

6,360

 

 

 

236,091

 

 

 

198,079

 

-9-


EXONY LIMITED

NOTES TO THE FINANCIAL STATEMENTS

 

5.

Directors’ remuneration (continued)

No directors exercised share options during the current or preceding year.

The number of directors accruing benefits under company pension schemes was as follows:

 

 

2013

 

 

2012

 

 

No

 

 

No

 

Money purchase schemes

4

 

 

3

 

6.

Interest payable and similar charges

 

 

2013

 

  

2012

 

 

£

 

  

£

 

Bank interest payable

 

35

  

  

 

80

  

7.

Taxation on ordinary activities

(a) Analysis of charge / (credit) in the year

 

 

2013

 

 

2012

 

 

£

 

 

£

 

 

£

 

 

£

 

UK taxation

 

 

 

 

 

 

 

 

 

 

 

 

 

(restated)

 

In respect of the year:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

UK Corporation tax

 

 

 

 

 

-

 

 

 

 

 

 

 

-

 

(Over)/under provision in prior year

 

 

 

 

 

-

 

 

 

 

 

 

 

4,540

 

 

 

 

 

 

 

-

 

 

 

 

 

 

 

4,540

 

Foreign tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current tax on income for the year

 

48,538

 

 

 

 

 

 

 

52,505

 

 

 

 

 

Adjustments in respect of prior periods

 

-

 

 

 

 

 

 

 

4,672

 

 

 

 

 

 

 

 

 

 

 

48,538

 

 

 

 

 

 

 

57,177

 

 

 

 

 

 

 

48,538

 

 

 

 

 

 

 

61,717

 

Deferred tax:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Origination and reversal of timing differences

 

15,985

 

 

 

 

 

 

 

(140,022

)

 

 

 

 

Total deferred tax (note 11)

 

 

 

 

 

15,985

 

 

 

 

 

 

 

(140,022

)

Tax charge/(credit) on ordinary activities

 

 

 

 

 

64,523

 

 

 

 

 

 

 

(78,305

)

-10-


EXONY LIMITED

NOTES TO THE FINANCIAL STATEMENTS

 

7.

Taxation on ordinary activities (continued)

(b) Factors affecting current tax charge

The tax assessed on the profit on ordinary activities for the year is lower than the standard rate of corporation tax in the UK of 23.5% (2012 - 25.00%).

The company has estimated losses of £990,000 (2012 - £1,380,000) available for carry forward against future trading profits. A deferred tax asset of £228,000 (2012 - £260,000) has been recognised in respect of these losses based on a reasonable expectation of future taxable profits.

 

 

2013

 

 

2012

(restated)

 

 

£

 

 

£

 

Profit on ordinary activities before taxation

 

933,317

 

 

 

464,028

 

Profit on ordinary activities by rate of tax

 

218,801

 

 

 

115,490

 

Effects of:

 

 

 

 

 

 

 

Expenses not deductible for tax purposes

 

14,885

 

 

 

15,809

 

Capital allowances for period in excess of depreciation

 

(3,218

)

 

 

(1,366

)

Utilisation of tax losses

 

(99,432

)

 

 

(111,658

)

R&D tax credit

 

(89,261

)

 

 

(28,216

)

Share based payment adjustment

 

-

 

 

 

46,484

 

Foreign tax at higher rate

 

6,763

 

 

 

15,962

 

Adjustments to tax charge in respect of previous periods

 

-

 

 

 

9,212

 

Total current tax (note 7(a))

 

48,538

 

 

 

61,717

 

8.

Profit attributable to members of the parent company

The profit dealt with in the financial statements of the parent company was £824,769 (2012 - £480,340).

9.

Tangible fixed assets

 

 

Leasehold
Property

 

 

Office
equipment

 

 

Fixtures
&
Fittings

 

 

Total

 

 

£

 

 

£

 

 

£

 

 

£

 

Cost

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At 30 September 2012

 

30,839

 

 

 

219,603

 

 

 

51,803

 

 

 

302,245

 

Additions

 

-

 

 

 

50,248

 

 

 

5,569

 

 

 

55,817

 

Disposals

 

-

 

 

 

(103,799

)

 

 

-

 

 

 

(103,799

)

Foreign exchange

 

-

 

 

 

(767

)

 

 

-

 

 

 

(767

)

At 30 September 2013

 

30,839

 

 

 

165,285

 

 

 

57,372

 

 

 

253,496

 

Depreciation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At 30 September 2012

 

30,839

 

 

 

176,355

 

 

 

45,914

 

 

 

253,108

 

Charge for the year

 

-

 

 

 

44,824

 

 

 

3,914

 

 

 

48,738

 

On disposals

 

-

 

 

 

(102,234

)

 

 

-

 

 

 

(102,234

)

Foreign exchange

 

-

 

 

 

(776

)

 

 

-

 

 

 

(776

)

At 30 September 2013

 

30,839

 

 

 

118,169

 

 

 

49,828

 

 

 

198,836

 

Net book value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At 30 September 2013

 

-

 

 

 

47,116

 

 

 

7,544

 

 

 

54,660

 

At 30 September 2012

 

-

 

 

 

43,248

 

 

 

5,889

 

 

 

49,137

 

-11-


EXONY LIMITED

NOTES TO THE FINANCIAL STATEMENTS

 

10.

Debtors

 

 

2013

 

 

2012

(restated)

 

 

£

 

 

£

 

Trade debtors

 

2,073,746

 

 

 

1,918,175

 

VAT recoverable

 

46,648

 

 

 

43,761

 

Deferred taxation (note 11)

 

280,292

 

 

 

296,277

 

Prepayments and accrued income

 

512,016

 

 

 

457,604

 

 

 

2,912,702

 

 

 

2,715,817

 

11.

Deferred taxation

The movement in the deferred taxation asset during the year was:

 

 

2013

 

 

2012

(restated)

 

 

£

 

 

£

 

Asset brought forward

 

296,277

 

 

 

156,255

 

Increase/(decrease) in asset

 

(15,985

)

 

 

140,022

 

Asset carried forward

 

280,292

 

 

 

296,277

 

The group’s asset for deferred taxation consists of the tax effect of timing differences in respect of:

 

 

2013

 

 

2012

 

 

Provided

 

 

Unprovided

 

 

Provided

(restated)

 

 

Unprovided

 

 

£

 

 

£

 

 

£

 

 

£

 

Tax losses available

 

228,000

 

 

 

-

 

 

 

260,000

 

 

 

-

 

Share based payments

 

52,292

 

 

 

-

 

 

 

36,277

 

 

 

-

 

 

 

280,292

 

 

 

-

 

 

 

296,277

 

 

 

-

 

12.

Creditors: Amounts falling due within one year

 

 

2013

 

 

2012

(restated)

 

 

£

 

 

£

 

Trade creditors

 

306,445

 

 

 

317,525

 

Corporation tax

 

7,865

 

 

 

40,722

 

PAYE and social security

 

78,561

 

 

 

71,087

 

Other taxation

 

61,794

 

 

 

44,277

 

Other creditors

 

469,807

 

 

 

488,516

 

Accruals and deferred income

 

2,479,004

 

 

 

2,179,059

 

 

 

3,403,476

 

 

 

3,141,186

 

Included within other creditors is £433,664 (2012 - £309,563) secured on a trade debtor totalling £433,664 (2012 - £386,615).

13.

Creditors: Amounts falling due after more than one year

 

 

2013

 

 

2012

 

 

£

 

 

£

 

Accruals and deferred income

 

535,357

 

 

 

285,058

 

-12-


EXONY LIMITED

NOTES TO THE FINANCIAL STATEMENTS

 

14.

Pensions

The group operates a defined contribution pension scheme. The assets of the scheme are held separately from those of the group in an independently administered fund. The pension cost charge represents contributions payable by the group to the fund and in the year amounted to £353,286 (2012 - £223,555). Included within other creditors is a total of £29,913 (2012 - £22,047) relating to unpaid pension contributions.

15.

Share-based payments

The group has a share option scheme for all employees (including directors). Options are exercisable at a price agreed when the options are issued. The vesting period is usually over 1 to 3 years however, the share options may not be exercised after the option holder no longer holds employment with any member of the Group or has given or received notice of termination of their employment with any member of the group, except in some circumstances as documented in the share option agreement.

If the options remain unexercised after a period of 10 years from the date of grant, the options expire.

Details of the share options and the weighted average exercise price (WAEP) outstanding during the period are as follows:

 

 

2013

 

 

2013

 

 

2012

 

 

2012

 

 

No

 

 

WAEP (£)

 

 

No

 

 

WAEP (£)

 

Outstanding at beginning of period

 

1,933,431

 

 

 

0.09

 

 

 

1,794,031

 

 

 

0.09

 

Granted in period

 

39,629

 

 

 

0.07

 

 

 

991,910

 

 

 

0.05

 

Lapsed during period

 

(55,196

)

 

 

0.26

 

 

 

(852,510

)

 

 

0.18

 

Outstanding at the end of the period

 

1,917,864

 

 

 

0.08

 

 

 

1,933,431

 

 

 

0.09

 

Exercisable at the end of the period

 

1,804,400

 

 

 

0.09

 

 

 

1,792,696

 

 

 

0.09

 

No options were exercised during the year.

For options outstanding at the end of the year the range of exercise prices and remaining contractual life are as follows:-

 

Expiry Date

Exercise
Price

 

 

2013

 

 

2012

 

 

£

 

 

No

 

 

No

 

Up to 30 September 2015

 

0.34

 

 

 

56,799

 

 

 

94,995

 

September 2015 – September 2023

 

0.15

 

 

 

503,728

 

 

 

499,228

 

September 2018 – September 2023

 

0.05

 

 

 

1,357,338

 

 

 

1,339,208

 

The group recognised total expenses of £Nil (2012 - £185,938) related to equity-settled share-based payment transactions during the year.

The company determined the expected life of stock options based on the assumption that the options will not be exercised until the company is sold. The risk free interest rate was based on the UK treasury yield curve as at the year end. Expected volatility is determined using weighted average implied market volatility combined with historical volatility. The company believes that a blend of historical volatility and implied volatility better reflects future market conditions and better indicates expected volatility than purely historical volatility.

-13-


EXONY LIMITED

NOTES TO THE FINANCIAL STATEMENTS

 

15.

Share-based payments (continued)

The fair values for grants under the equity settled scheme were calculated using the Black Scholes Model. The inputs into the model were as follows:

 

 

2013

 

 

2012

 

Expected volatility - %

 

10.00

 

 

 

10.00

 

Expected life - years

 

3.00

 

 

 

3.00

 

Weighted average share price

 

0.23

 

 

 

0.23

 

Weighted average exercise price

 

0.07

 

 

 

0.07

 

Risk free rate - %

 

3.00

 

 

 

3.00

 

As at 30 September 2013 and 30 September 2012, the Company had warrants outstanding over a maximum value of £162,500 preferred ordinary shares based on the strike price at exercise date. The warrants are exercisable by 28th April 2016 at a subscribed price and methodology that will be determined by certain variable factors at exercise.

16.

Commitments under operating leases

The group had annual commitments under non-cancellable operating leases as set out below.

 

 

2013

 

 

2012

 

 

Land
and
buildings

 

 

Other
items

 

 

Land
and
buildings

 

 

Other
items

 

 

£

 

 

£

 

 

£

 

 

£

 

Operating leases which expire:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Within 1 year

 

37,142

 

 

 

240

 

 

 

-

 

 

 

757

 

Within 2 to 5 years

 

-

 

 

 

-

 

 

 

94,274

 

 

 

-

 

 

 

37,142

 

 

 

240

 

 

 

94,274

 

 

 

757

 

17.

Related party transactions

The group has taken advantage of FRS8 to not disclose any transactions or balances between group companies that have been eliminated on consolidation.

Mr David Carratt is a director of both Exony Limited and Vie Carratt Limited. During the year marketing services to the value of £8,000 had been provided by Vie Carratt Limited of which £7,680 (inclusive of VAT) was outstanding as at 30 September 2013.

18.

Share capital

Allotted and called up:

 

 

2013

 

 

2012

 

 

No

 

 

£

 

 

No

 

 

£

 

Ordinary shares of £0.001 each

 

4,090,268

 

 

 

4,090

 

 

 

4,090,268

 

 

 

4,090

 

Deferred Ordinary shares of £0.0001 each

 

3,177,936

 

 

 

318

 

 

 

3,177,936

 

 

 

318

 

Preferred Ordinary shares of £0.0001 each

 

6,405,272

 

 

 

641

 

 

 

6,405,272

 

 

 

641

 

 

 

13,673,476

 

 

 

5,049

 

 

 

13,673,476

 

 

 

5,049

 

-14-


EXONY LIMITED

NOTES TO THE FINANCIAL STATEMENTS

 

18.

Share capital (continued)

The ordinary and preferred ordinary shares rank pari-passu except for on liquidation or listing of the business. On listing the preferred ordinary shares shall either receive a dividend of £4,250,000 or are entitled to be issued or subscribe for shares by way of a bonus capitalisation or par offering to increase their shareholding at the placing price to £4,250,000. Thereafter the balance is paid pro-rata and pari-passu with the equity shares as if they were one class of shares.

Ordinary and preferred shareholders are entitled to receive notice of, to attend and to vote at general meetings of the company.

The deferred shares do not entitle their holders to any dividend, to receive notice or attend or speak at general meetings of the company nor to vote at such meetings.

19.

Reserves

Profit and loss account:

 

 

2013

£

 

 

2012

£

 

Balance brought forward as previously stated

 

1,933,294

 

 

 

1,284,988

 

Prior year adjustment

 

93,933

 

 

 

-

 

Balance brought forward as restated

 

2,027,227

 

 

 

1,284,988

 

Profit for the year as previously stated

 

868,794

 

 

 

650,593

 

Exchange differences arising on consolidation of foreign subsidiary

 

(2,322

)

 

 

(2,287

)

Balance carried forward

 

2,893,699

 

 

 

1,933,294

 

Profit as previously stated

 

 

 

 

 

650,593

 

Prior year adjustment (note 1)

 

 

 

 

 

(108,260

)

Profit as restated

 

 

 

 

 

542,333

 

20.

Reconciliation of movements in shareholders’ funds

 

 

2013

 

 

2012

As restated

 

 

£

 

 

£

 

Profit for the financial year

 

868,794

 

 

 

542,333

 

Exchange differences arising on consolidation of foreign subsidiary

 

(2,322

)

 

 

(2,287

)

Share option reserve

 

 

 

 

185,938

 

Net addition to shareholders’ funds

 

866,472

 

 

 

725,984

 

Opening shareholders’ funds as previously stated (originally £1,938,343 before prior year adjustment of £93,933)

 

2,032,276

 

 

 

1,306,292

 

Closing shareholders’ funds

 

2,898,748

 

 

 

2,032,276

 

-15-


EXONY LIMITED

NOTES TO THE FINANCIAL STATEMENTS

 

21.

Notes to the cash flow statement

Reconciliation of operating profit to net cash

Inflow from operating activities

 

 

2013

 

 

2012

(restated)

 

 

£

 

 

£

 

Operating profit

 

931,067

 

 

 

461,959

 

Depreciation

 

48,738

 

 

 

35,094

 

Loss on disposal of fixed assets

 

1,566

 

 

 

744

 

Increase in debtors

 

(214,041

)

 

 

(850,577

)

Increase in creditors

 

551,198

 

 

 

807,683

 

Foreign exchange

 

(3,079

)

 

 

2,673

 

Equity-settled share-based payments

 

 

 

 

185,938

 

Net cash inflow from operating activities

 

1,315,449

 

 

 

643,514

 

Reconciliation of net cash flow to movement in net funds

 

 

2013

 

 

2012

 

 

£

 

 

£

 

Increase in cash in the period

 

1,182,959

 

 

 

562,521

 

Foreign exchange

 

(6,306

)

 

 

(4,775

)

Movement in net funds in the period

 

1,176,653

 

 

 

557,746

 

Net funds brought forward

 

2,693,566

 

 

 

2,135,820

 

Net funds carried forward

 

3,870,219

 

 

 

2,693,566

 

Analysis of changes in net funds

 

 

At
October 1st
2012

 

 

Cashflow

 

 

Non Cash
Movements

 

 

At September 30th

2013

 

 

£

 

 

£

 

 

£

 

 

£

 

Cash at bank and in hand

 

2,693,566

 

 

 

1,182,959

 

 

 

(6,306

)

 

 

3,870,219

 

Non cash changes represent translation differences on consolidation of the overseas subsidiary bank accounts.

22.

Ultimate controlling party

The directors do not consider there to be an ultimate controlling party.

23.

Post balance sheet events

On 30th July, 2014, Exony Limited and eGain Corporation entered into a definitive Share Purchase Agreement for eGain Corporation to acquire all the outstanding share capital of Exony for USD$16.1million with $8.05 million in eGain shares and $8.05 million in cash. The Agreement completed on 6th August 2014 and the purchase price will be subject to adjustment based on Exony’s working capital at completion.

-16-


EXONY LIMITED

NOTES TO THE FINANCIAL STATEMENTS

 

24.

UK to US GAAP reconciliation

Exony prepares its financial statements in accordance with accounting principles generally accepted in the United Kingdom (‘UK GAAP’), which differs in certain respects from accounting principles generally accepted in the United States of America (‘US GAAP’). Reconciliations of profit before and after tax for the financial years and shareholders’ funds ( or shareholders’ equity) as reported in the Consolidated financial statements under UK GAAP and those under US GAAP are set out below.

 

 

2013

 

 

2012

 

 

£

 

 

£

 

Profit before tax under UK GAAP

 

933,317

 

 

 

464,028

 

Tax on profit on ordinary activities: (note 1)

 

(17,913

)

 

 

42,730

 

UK GAAP tax (charge) / credit

 

(64,523

)

 

 

78,305

 

Profit after tax under US GAAP

 

850,881

 

 

 

585,063

 

Shareholders’ funds under UK GAAP

 

2,898,748

 

 

 

2,032,276

 

Debtors deferred tax: (note 1)

 

24,817

 

 

 

42,730

 

Shareholders’ funds under US GAAP

 

2,923,565

 

 

 

2,075,006

 

Note 1 : Under UK GAAP a deferred tax asset relating to share based compensation is based on the lower of the charge in the profit and loss account or the gain at the period end. Under US GAAP the deferred tax asset is based on the charge to the profit and loss account.

 

 

-17-