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EX-99.1 - EX-99.1 - EGAIN Corpegan-ex991_20141010135.htm
EX-99.3 - EX-99.3 - EGAIN Corpegan-ex993_201410108.htm
EX-23.1 - EX-23.1 - EGAIN Corpegan-ex231_2014101010.htm

 

Exhibit 99.2

EXONY LIMITED

INTERIM CONSOLIDATED PROFIT AND LOSS ACCOUNTS (Unaudited)

FOR THE NINE MONTH PERIODS ENDED 30 JUNE 2013 AND 30 JUNE 2014

 

 

  

 

 

  

2014

 

 

2013

 

 

  

Note

 

  

£

 

 

£

 

Group turnover

  

 

2

  

  

 

6,680,784

  

 

 

6,852,094

  

Cost of sales

  

 

 

 

  

 

(2,414,346

 

 

(2,684,427

Gross profit

  

 

 

 

  

 

4,266,438

  

 

 

4,167,667

  

Administrative expenses

  

 

 

 

  

 

(4,300,576

 

 

(3,475,860

Operating (loss)/profit

  

 

3

  

  

 

(34,138

 

 

691,807

  

Interest receivable

  

 

 

 

  

 

5,249

  

 

 

1,137

  

Interest payable and similar charges

  

 

6

  

  

 

(4,490

 

 

(30

(Loss)/Profit on ordinary activities before taxation

  

 

 

 

  

 

(33,379

 

 

692,914

  

Tax on (loss)/profit on ordinary activities

  

 

7

  

  

 

49,761

  

 

 

(70,284

Profit for the financial period

  

 

8

  

  

 

16,382

  

 

 

622,630

  

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

The notes on pages 5 to 15 form part of these financial statements.

 

 

 

 

- 1 -


 

EXONY LIMITED

INTERIM CONSOLIDATED STATEMENTS OF TOTAL RECOGNISED GAINS AND LOSSES

(Unaudited)

FOR THE NINE MONTH PERIODS ENDED 30 JUNE 2013 AND 30 JUNE 2014

 

 

  

 

 

  

2014

 

 

2013

 

 

  

Note

 

  

£

 

 

£

 

Profit for the financial period

  

 

 

 

  

 

16,382

  

 

 

622,630

  

Exchange differences arising on consolidation of foreign subsidiary

  

 

 

 

  

 

(8,987

 

 

13,877

  

Total gains and losses recognised since the last annual report

  

 

 

 

  

 

7,395

  

 

 

636,507

  

The notes on pages 5 to 15 form part of these financial statements.

 

 

 

 

- 2 -


 

EXONY LIMITED

INTERIM CONSOLIDATED BALANCE SHEETS

(Unaudited)

AT 30 JUNE 2013 AND 2014

 

 

  

 

 

  

2014

 

 

2013

 

 

  

Note

 

  

£

 

 

£

 

 

£

 

 

£

 

Fixed assets

  

 

 

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tangible assets

  

 

9

  

  

 

 

 

 

 

240,335

  

 

 

 

 

 

 

56,168

  

Current assets

  

 

 

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Debtors

  

 

10

  

  

 

2,420,241

  

 

 

 

 

 

 

2,246,780

  

 

 

 

 

Cash at bank

  

 

 

 

  

 

4,470,345

  

 

 

 

 

 

 

3,685,442

  

 

 

 

 

 

  

 

 

 

  

 

6,890,586

  

 

 

 

 

 

 

5,932,222

  

 

 

 

 

Creditors: Amounts falling due within one year

  

 

12a

  

  

 

(3,142,903

 

 

 

 

 

 

(3,014,694

 

 

 

 

Net current assets

  

 

 

 

  

 

 

 

 

 

3,747,683

  

 

 

 

 

 

 

2,917,528

  

Total assets less current liabilities

  

 

 

 

  

 

 

 

 

 

3,988,018

  

 

 

 

 

 

 

2,973,696

  

Creditors: Amounts falling due after more than one year

  

 

12b

  

  

 

 

 

 

 

(889,334

 

 

 

 

 

 

(304,913

Provisions for liabilities

  

 

13

  

  

 

 

 

 

 

(192,541

 

 

 

 

 

 

-  

  

 

  

 

 

 

  

 

 

 

 

 

2,906,143

  

 

 

 

 

 

 

2,668,783

  

Capital and reserves

  

 

 

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Called-up share capital

  

 

18

  

  

 

 

 

 

 

5,049

  

 

 

 

 

 

 

5,049

  

Profit and loss account

  

 

19

  

  

 

 

 

 

 

2,901,094

  

 

 

 

 

 

 

2,663,734

  

Shareholders’ funds

  

 

20

  

  

 

 

 

 

 

2,906,143

  

 

 

 

 

 

 

2,668,783

  

The notes on pages 5 to 15 form part of these financial statements.

 

 

 

 

- 3 -


 

EXONY LIMITED

CONSOLIDATED CASH FLOW STATEMENTS

(unaudited)

FOR THE NINE MONTH PERIODS ENDED 30 JUNE 2013 AND 2014

 

 

 

 

 

 

2014 

 

 

2013 

 

 

  

Note

 

  

£

 

 

£

 

 

£

 

 

£

 

Net cash inflow from operating activities

  

 

21

  

  

 

 

 

 

 

875,814

  

 

 

 

 

 

 

1,095,145

  

Returns on investments and Servicing of finance

  

 

 

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest received

  

 

 

 

  

 

5,249

  

 

 

 

 

 

 

1,137

  

 

 

 

 

Interest paid

  

 

 

 

  

 

(4,490

 

 

 

 

 

 

(30

 

 

 

 

Net cash inflow from returns on investments and servicing of finance

  

 

 

 

  

 

 

 

 

 

759

  

 

 

 

 

 

 

1,107

  

Taxation

  

 

 

 

  

 

 

 

 

 

(18,236

 

 

 

 

 

 

(72,606

Capital expenditure

  

 

 

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Payments to acquire tangible fixed assets

  

 

 

 

  

 

(243,177

 

 

 

 

 

 

(42,125

 

 

 

 

Receipts from sale of fixed assets

  

 

 

 

  

 

731

  

 

 

 

 

 

 

-

  

 

 

 

 

Net cash outflow from capital expenditure

  

 

 

 

  

 

 

 

 

 

(242,446

 

 

 

 

 

 

(42,125

Increase in cash

  

 

21

  

  

 

 

 

 

 

615,891

  

 

 

 

 

 

 

981,521

  

The notes on pages 5 to 15 form part of these financial statements.

 

 

 

 

- 4 -


 

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.

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.

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.

 

 

 

 

- 5 -


EXONY LIMITED

NOTES TO THE FINANCIAL STATEMENTS

 

1.

Accounting policies (continued)

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.

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.

 

- 6 -


EXONY LIMITED

NOTES TO THE FINANCIAL STATEMENTS

 

1.

Accounting policies (continued)

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:

 

 

  

2014

 

  

2013

 

 

  

£

 

  

£

 

United Kingdom

  

 

943,532

  

  

 

539,657

  

Overseas

  

 

5,737,252

  

  

 

6,312,437

  

 

  

 

6,680,784

  

  

 

6,852,094

  

3.

Operating profit

Operating profit is stated after charging:

 

 

  

2014

 

 

2013

 

 

  

£

 

 

£

 

Operating lease costs

  

 

96,415

  

 

 

69,029

  

Depreciation of owned fixed assets

  

 

56,127

  

 

 

36,151

  

Loss on disposal of fixed assets

  

 

(212

 

 

-

  

Research and development expenditure

  

 

1,203,476

  

 

 

646,569

  

4.

Particulars of employees

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

 

 

  

2014

 

  

2013

 

 

  

No

 

  

No

 

Sales, marketing and technical

  

 

60

  

  

 

56

  

Administrative and finance

  

 

8

  

  

 

8

  

 

  

 

68

  

  

 

64

  

 

- 7 -


EXONY LIMITED

NOTES TO THE FINANCIAL STATEMENTS

 

4.

Particulars of employees (continued)

The aggregate payroll costs of the above were:

 

 

  

2014

 

  

2013

 

 

  

£

 

  

£

 

Wages and salaries

  

 

4,023,765

  

  

 

3,262,492

  

Social security costs

  

 

356,084

  

  

 

309,711

  

Other pension costs

  

 

266,655

  

  

 

237,763

  

 

  

 

4,646,504

  

  

 

3,809,966

  

5.

Directors’ remuneration

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

 

 

  

2014

 

  

2013

 

 

  

£

 

  

£

 

Remuneration receivable

  

 

542,684

  

  

 

454,935

  

Value of company pension contributions to money purchase schemes

  

 

102,955

  

  

 

56,803

  

 

  

 

645,639

  

  

 

511,738

  

Remuneration of highest paid director

 

 

  

2014

 

  

2013

 

 

  

£

 

  

£

 

Remuneration receivable

  

 

161,839

  

  

 

181,429

  

Value of company pension contributions to money purchase schemes

  

 

12,740

  

  

 

7,357

  

 

  

 

174,579

  

  

 

188,786

  

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

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

 

 

  

2014

 

  

2013

 

 

  

No

 

  

No

 

Money purchase schemes

  

 

4

  

  

 

3

  

6.

Interest payable and similar charges

 

 

  

2014

 

  

2013

 

 

  

£

 

  

£

 

Bank interest payable

  

 

-  

  

  

 

30

  

Other finance charges

  

 

4,490

  

  

 

-  

  

 

- 8 -


EXONY LIMITED

NOTES TO THE FINANCIAL STATEMENTS

 

7.

Taxation on (loss)/profit on ordinary activities

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

 

 

  

2014

 

 

2013

 

 

  

£

 

 

£

 

 

£

 

  

£

 

UK taxation

  

 

 

 

 

 

 

 

 

 

 

 

  

 

 

 

In respect of the period:

  

 

 

 

 

 

 

 

 

 

 

 

  

 

 

 

UK Corporation tax

  

 

 

 

 

 

-  

  

 

 

 

 

  

 

-  

  

 

  

 

 

 

 

 

-  

  

 

 

 

 

  

 

-  

  

Foreign tax

  

 

 

 

 

 

 

 

 

 

 

 

  

 

 

 

Current tax on income for the period

  

 

26,101

  

 

 

 

 

 

 

31,884

  

  

 

 

 

Adjustments in respect of prior periods

  

 

(12,862

 

 

 

 

 

 

-  

  

  

 

 

 

 

  

 

 

 

 

 

13,239

  

 

 

 

 

  

 

31,884

  

 

  

 

 

 

 

 

13,239

  

 

 

 

 

  

 

31,884

  

Deferred tax:

  

 

 

 

 

 

 

 

 

 

 

 

  

 

 

 

Origination and reversal of timing differences

  

 

(63,000

 

 

 

 

 

 

38,400

  

  

 

 

 

Total deferred tax (note 11)

  

 

 

 

 

 

(63,000

 

 

 

 

  

 

38,400

  

Tax (credit)/charge on ordinary activities

  

 

 

 

 

 

(49,761

 

 

 

 

  

 

70,284

  

(b) Factors affecting current tax charge

The tax assessed on the profit/(loss) on ordinary activities for the period is lower than the standard rate of corporation tax in the UK of 22.3% (2013 23.67%).

The company has estimated tax losses of £1,368,790 (2013 - £943,278) available for carry forward against future trading profits. A deferred tax asset of £276,000 (2013 - £217,000) has been recognised in respect of these losses based on a reasonable expectation of future taxable profits.

 

 

  

2014

 

 

2013

 

 

  

£

 

 

£

 

(Loss)/profit on ordinary activities before taxation

  

 

(33,379

 

 

692,914

  

(Loss)/profit on ordinary activities by rate of tax

  

 

 

 

 

 

 

 

Effects of:

  

 

(7,444

 

 

164,013

  

Expenses not deductible for tax purposes

  

 

9,380

  

 

 

2,813

  

Depreciation in excess of capital allowances for period

  

 

1,117

  

 

 

(947

Utilisation / carry forward of tax losses

  

 

109,840

  

 

 

(83,581

R&D tax credit

  

 

(96,490

 

 

(60,624

Foreign tax at higher rate

  

 

9,698

  

 

 

10,210

  

Adjustments to tax charge in respect of previous periods

  

 

(12,862

 

 

-

  

Total current tax (note 7(a))

  

 

13,239

  

 

 

31,884

  

8.

Profit attributable to members of the parent company

The (loss)/profit dealt with in the financial statements of the parent company was £ (72,893) (2013 - £549,521).

 

- 9 -


EXONY LIMITED

NOTES TO THE FINANCIAL STATEMENTS

 

9.

Tangible fixed assets

9 months ended 30 June 2014

 

 

  

Leasehold

 

  

Office

 

 

Fixtures &

 

  

 

 

 

  

Property

 

  

equipment

 

 

Fittings

 

  

Total

 

 

  

£

 

  

£

 

 

£

 

  

£

 

Cost

  

 

 

 

  

 

 

 

 

 

 

 

  

 

 

 

At 30 September 2013

  

 

30,839

  

  

 

165,285

  

 

 

57,372

  

  

 

253,496

  

Additions

  

 

206,066

  

  

 

37,111

  

 

 

-

  

  

 

243,177

  

Disposals

  

 

-

  

  

 

(13,300

 

 

-

  

  

 

(13,300

Foreign exchange

  

 

-

  

  

 

(1,079

 

 

3

  

  

 

(1,076

At 30 June 2014

  

 

236,905

  

  

 

188,017

  

 

 

57,375

  

  

 

482,297

  

Depreciation

  

 

 

 

  

 

 

 

 

 

 

 

  

 

 

 

At 30 September 2013

  

 

30,839

  

  

 

118,169

  

 

 

49,828

  

  

 

198,836

  

Charge for the period

  

 

17,473

  

  

 

34,309

  

 

 

4,345

  

  

 

56,127

  

On disposals

  

 

-

  

  

 

(12,357

 

 

-

  

  

 

(12,357

Foreign exchange

  

 

-

  

  

 

(644

 

 

-

  

  

 

(644

At 30 June 2014

  

 

48,312

  

  

 

139,477

  

 

 

54,173

  

  

 

241,962

  

Net book value

  

 

 

 

  

 

 

 

 

 

 

 

  

 

 

 

At 30 June 2014

  

 

188,593

  

  

 

48,540

  

 

 

3,202

  

  

 

240,335

  

9 months ended 30 June 2013

 

 

  

Leasehold

 

  

Office

 

 

Fixtures &

 

  

 

 

 

  

Property

 

  

equipment

 

 

Fittings

 

  

Total

 

 

  

£

 

  

£

 

 

£

 

  

£

 

Cost

  

 

 

 

  

 

 

 

 

 

 

 

  

 

 

 

At 30 September 2012

  

 

30,839

  

  

 

219,603

  

 

 

51,803

  

  

 

302,245

  

Additions

  

 

-

  

  

 

40,595

  

 

 

1,530

  

  

 

42,125

  

Disposals

  

 

-

  

  

 

(10,456

 

 

-

  

  

 

(10,456

Foreign exchange

  

 

-

  

  

 

781

  

 

 

10

  

  

 

791

  

At 30 June 2013

  

 

30,839

  

  

 

250,523

  

 

 

53,343

  

  

 

334,705

  

Depreciation

  

 

 

 

  

 

 

 

 

 

 

 

  

 

 

 

At 30 September 2012

  

 

30,839

  

  

 

176,355

  

 

 

45,914

  

  

 

253,108

  

Charge for the period

  

 

-

  

  

 

33,254

  

 

 

2,897

  

  

 

36,151

  

On disposals

  

 

-

  

  

 

(10,456

 

 

-

  

  

 

(10,456

Foreign exchange

  

 

-

  

  

 

(266

 

 

-

  

  

 

(266

At 30 June 2013

  

 

30,839

  

  

 

198,887

  

 

 

48,811

  

  

 

278,537

  

Net book value

  

 

 

 

  

 

 

 

 

 

 

 

  

 

 

 

At 30 June 2013

  

 

-

  

  

 

52,818

  

 

 

4,532

  

  

 

56,168

  

10.

Debtors

 

 

  

2014

 

  

2013

 

 

  

£

 

  

£

 

Trade debtors

  

 

1,264,746

  

  

 

1,598,671

  

VAT recoverable

  

 

-

  

  

 

25,668

  

Deferred taxation (note 11)

  

 

343,292

  

  

 

257,877

  

Prepayments and accrued income

  

 

812,203

  

  

 

364,564

  

 

  

 

2,420,241

  

  

 

2,246,780

  

 

- 10 -


EXONY LIMITED

NOTES TO THE FINANCIAL STATEMENTS

 

11.

Deferred taxation

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

 

 

  

2014

 

  

2013

 

 

  

£

 

  

£

 

Asset brought forward

  

 

280,292

  

  

 

296,277

  

Increase/(decrease) in asset

  

 

63,000

  

  

 

(38,400

Asset carried forward

  

 

343,292

  

  

 

257,877

  

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

 

 

  

2014

 

  

2013

 

 

  

Provided

 

  

Unprovided

 

  

Provided

 

  

Unprovided

 

 

  

£

 

  

£

 

  

£

 

  

£

 

Tax losses available

  

 

276,000

  

  

 

-

  

  

 

217,000

  

  

 

-

  

Share based payments

  

 

67,292

  

  

 

-

  

  

 

40,877

  

  

 

-

  

 

  

 

343,292

  

  

 

-

  

  

 

257,877

  

  

 

-

  

12a.

Creditors: Amounts falling due within one year

 

 

  

2014

 

  

2013

 

 

  

£

 

  

£

 

Trade creditors

  

 

332,686

  

  

 

122,181

  

PAYE and social security

  

 

106,427

  

  

 

130,189

  

Other taxation

  

 

21,929

  

  

 

21,391

  

Other creditors

  

 

40,263

  

  

 

524,287

  

Accruals and deferred income

  

 

2,641,598

  

  

 

2,216,646

  

 

  

 

3,142,903

  

  

 

3,014,694

  

Included within other creditors is £nil (2013 - £481,183) secured on a trade debtor totalling £nil (2013 - £481,183).

12b.

Creditors: Amounts falling due after more than one year

 

 

  

2014

 

  

2013

 

 

  

£

 

  

£

 

Accruals and deferred income

  

 

889,334

  

  

 

304,913

  

13.

Provisions for liabilities

 

 

  

2014

 

  

2013

 

 

  

£

 

  

£

 

Dilapidations

  

 

192,541

  

  

 

-

  

The dilapidations provision is based on the future expected repair costs required to restore the Group’s leased building in Newbury, United Kingdom to its fair condition at the end of the lease term. The lease was for ten years from January 24, 2014 with a break after five years. Contractual amounts are expected to be incurred at the end of the lease term.

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 period amounted to £236,655 (2013 - £237,763). Included within other creditors is a total of £35,623 (2013 - £30,131) relating to unpaid pension contributions at the period end.

 

- 11 -


EXONY LIMITED

NOTES TO THE FINANCIAL STATEMENTS

 

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:

 

 

  

2014

 

 

2014

 

  

2013

 

 

2013

 

 

  

No

 

 

WAEP (£)

 

  

No

 

 

WAEP (£)

 

Outstanding at beginning of period

  

 

1,917,864

  

 

 

0.08

  

  

 

1,933,431

  

 

 

0.09

  

Granted in period

  

 

-  

  

 

 

-  

  

  

 

34,629

  

 

 

0.06

  

Lapsed during period

  

 

(38,703

 

 

0.30

  

  

 

(53,696

 

 

0.26

  

Outstanding at the end of the period

  

 

1,879,161

  

 

 

0.08

  

  

 

1,914,864

  

 

 

0.08

  

Exercisable at the end of the period

  

 

1,875,661

  

 

 

0.08

  

  

 

1,880,175

  

 

 

0.09

  

No options were exercised during the period.

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

 

  

2014

 

  

2013

 

 

  

£

 

  

No

 

  

No

 

Up to 30 September 2015

  

 

0.34

  

  

 

24,096

  

  

 

55,299

  

September 2015 – September 2023

  

 

0.15

  

  

 

503,728

  

  

 

501,728

  

September 2018 – September 2023

  

 

0.05

  

  

 

1,351,338

  

  

 

1,360,337

  

The group recognised total expenses of £nil (2013 - £nil) 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.

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:

 

 

  

2014

 

  

2013

 

Expected volatility - %

  

 

-  

  

  

 

10.00

  

Expected life – years

  

 

-  

  

  

 

3.00

  

Weighted average share price

  

 

-  

  

  

 

0.23

  

Weighted average exercise price

  

 

-  

  

  

 

0.07

  

Risk free rate - %

  

 

-  

  

  

 

3.00

  

As at 30 June 2014 and 30 June 2013, 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 28 April 2016 at a subscribed price and methodology that will be determined by certain variable factors at exercise.

 

- 12 -


EXONY LIMITED

NOTES TO THE FINANCIAL STATEMENTS

 

16.

Commitments under operating leases

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

 

 

  

2014

 

  

2013

 

 

  

Land and
buildings

 

  

Other items

 

  

Land and
buildings

 

  

Other items

 

 

  

£

 

  

£

 

  

£

 

  

£

 

Operating leases which expire:

  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

Within 1 year

  

 

-

  

  

 

-

  

  

 

37,142

  

  

 

-

  

Within 2 to 5 years

  

 

114,785

  

  

 

-

  

  

 

-

  

  

 

-

  

 

  

 

114,785

  

  

 

-

  

  

 

37,142

  

  

 

-

  

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 period marketing services to the value of £25,600 (2013 - nil) had been provided by Vie Carratt all of which had been paid as at June 30, 2014.

18.

Share capital

Allotted and called up:

 

 

 

2014

 

 

2013

 

 

  

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

  

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:

  

2014

 

 

2013

 

 

  

£

 

 

£

 

Balance brought forward at October 1, 2013 and 2012 respectively

  

 

2,893,699

  

 

 

2,027,227

  

Profit for the period

  

 

16,382

  

 

 

622,630

  

Exchange differences arising on consolidation of foreign subsidiary

  

 

(8,987

 

 

13,877

  

Balance carried forward

  

 

2,901,094

  

 

 

2,663,734

  

 

- 13 -


EXONY LIMITED

NOTES TO THE FINANCIAL STATEMENTS

 

20.

Reconciliation of movements in shareholders’ funds

 

 

  

2014

 

 

2013

 

 

  

£

 

 

£

 

Profit for the financial period

  

 

16,382

  

 

 

622,630

  

Exchange differences arising on consolidation of foreign subsidiary

  

 

(8,987

 

 

13,877

  

Net addition to shareholders’ funds

  

 

7,395

  

 

 

636,507

  

Opening shareholders’ funds

  

 

2,898,748

  

 

 

2,032,276

  

Closing shareholders’ funds

  

 

2,906,143

  

 

 

2,668,783

  

21.

Notes to the cash flow statement

Reconciliation of operating (loss)/profit to net cash

Inflow from operating activities

 

 

  

2014

 

 

2013

 

 

  

£

 

 

£

 

Operating (loss)/profit

  

 

(34,138

 

 

691,807

  

Depreciation

  

 

56,127

  

 

 

36,151

  

Loss on disposal of fixed assets

  

 

(212

 

 

-  

  

Decrease in debtors

  

 

652,626

  

 

 

430,637

  

Increase/(decrease) in creditors

  

 

101,269

  

 

 

(65,915

Foreign exchange

  

 

4,766

  

 

 

2,465

  

Provisions

  

 

95,376

  

 

 

-  

  

Net cash inflow from operating activities

  

 

875,814

  

 

 

1,095,145

  

Reconciliation of net cash flow to movement in net funds

 

 

  

2014

 

 

2013

 

 

  

£

 

 

£

 

Increase in cash in the period

  

 

615,891

  

 

 

981,521

  

Foreign exchange

  

 

(15,765

 

 

10,355

  

Movement in net funds in the period

  

 

600,126

  

 

 

991,876

  

Net funds brought forward

  

 

3,870,219

  

 

 

2,693,566

  

Net funds carried forward

  

 

4,470,345

  

 

 

3,685,442

  

Analysis of changes in net funds

 

 

  

At October 1st
2013

 

  

Cashflow

 

  

Non Cash
Movements

 

 

At June 30th

2014

 

 

  

£

 

  

£

 

  

£

 

 

£

 

Cash at bank and in hand

  

 

3,870,219

  

  

 

615,891

  

  

 

(15,765

 

 

4,470,345

  

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

22.

Ultimate controlling party

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

 

- 14 -


EXONY LIMITED

NOTES TO THE FINANCIAL STATEMENTS

 

23.

Post Balance Sheet Events

On 30 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 Limited for USD$16.1 million with $8.05 million in eGain shares and $8.05 million in cash. The Agreement completed on 6 August 2014 and the purchase price will be subject to adjustment based on Exony Limited’s working capital at completion.

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 nine months ended June 30, 2013 and June 30, 2014 and shareholders’ funds ( or shareholders’ equity) as at June 30, 2013 and June 30, 2014 under UK GAAP and those under US GAAP are set out below.

 

 

  

2014

 

 

2013

 

 

  

£

 

 

£

 

(Loss)/profit before tax under UK GAAP

  

 

(33,379

 

 

692,914

  

Revenue (note 1)

  

 

(78,996

 

 

-  

  

Operating Expenses (note 2)

  

 

(144,386

 

 

(86,092

Profit before tax under US GAAP

  

 

(256,761

 

 

606,822

  

UK GAAP tax credit/(charge)

  

 

49,761

  

 

 

(70,284

Tax effect of US GAAP adjustments (note 3)

  

 

-  

  

 

 

19,801

  

Tax on profit on ordinary activities-deferred tax (note 4)

  

 

(24,989

 

 

(7,628

Profit after tax US GAAP

  

 

(231,989

 

 

548,711

  

Shareholders’ funds under UK GAAP

  

 

2,906,143

  

 

 

2,668,783

  

Fixed Assets (note 2)

  

 

(48,487

 

 

 

 

Deferred Revenue (note 1)

  

 

(78,996

 

 

-  

  

Accruals (note 2)

  

 

(95,899

 

 

(86,092

Debtors deferred tax (note 3)

  

 

-  

  

 

 

19,801

  

Debtors deferred tax (note 4)

  

 

(172

 

 

35,102

  

Shareholders’ funds under US GAAP

  

 

2,682,589

  

 

 

2,637,594

  

Note 1: Under US GAAP extended payment terms beyond normal policy may mean that the revenue recognition criteria under US GAAP are not met as fees cannot be justified as fixed and determinable. Under UK GAAP revenue may still be recognised.

Note 2: Under UK GAAP interim periods are treated as discrete periods whereas under US GAAP interim periods are treated as an integral part of the annual cycle. US GAAP therefore allows the spreading of costs, such as discretionary bonuses, across interim periods if they benefit more than one period in the annual cycle.

Under UK GAAP certain legal costs associated with the new lease and leasehold improvements have been capitalised which are treated as expense items under US GAAP.

Note 3: For clarification no additional deferred tax asset has been recognised as at June 30, 2014 for these additional UK to US GAAP reconciling items because the directors take a one year view of the recoverability of such losses and the company has already recognised a deferred tax asset as at June 30, 2014.

Note 4: 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.

 

 

 

- 15 -