- Consolidated Notes
- General Information
- Accounting and Valuation Principles
- 5. In general
- 6. Reporting currency
- 7. Currency translation
- 8. Intangible assets
- 9. Tangible assets
- 10. Accounting for leases
- 11. Borrowing costs
- 12. Impairment of non-financial assets
- 13. Financial investments and other financial assets
- 14. Cash and cash equivalents
- 15. Taxes
- 16. Provisions
- 17. Financial liabilities
- 18. Revenue and cost recognition
- 19. Contingent liabilities and contingent receivables
- 20. Management discretion and the main sources of forecasting uncertainty
- Notes to the Consolidated Balance Sheet
- 21. Liquid funds (cash and cash equivalents)
- 22. Trade receivables
- 23. Income tax claims
- 24. Prepaid expenses and other short-term assets
- 25. Intangible assets
- 26. Tangible assets
- 27. Development of the long-term assets
- 28. Rights of use
- 29. Deferred taxes
- 30. Other long-term assets
- 31. Short-term Liabilities
- 32. Liabilities due to credit institutions
- 33. Leasing liabilities
- 34. Trade Payables
- 35. Income tax liabilities and provisions
- 36. Customer contract liabilities and other liabilities
- 37. Liabilities due to credit institutions
- 38. Leasing liabilities
- 39. Subscribed capital
- 40. Reserves
- 41. Equity capital difference based on currency conversion
- Notes to the Consolidated Statement of Comprehensive Income
- Notes to the Consolidated Cash Flow Statement
- Other Information
- 51. Financial assets and liabilities
- 52. Capital risk management
- 53. Finance risk management
- 54. Market risks
- 55. Transactions between related parties
- 56. Events after the balance sheet closing date
- 57. Number of employees
- 58. Information on the Company’s governing bodies
- 59. Information on the fees of the Company auditors
- 60. Information on segment reporting
- 61. Proposal for the Appropriation of Profit
- 62. Statement under § 161 of the German Stock Corporation Act
- 63. Responsibility statement by the Executive Board
to the Consolidated Financial Statements of InVision AG as of 31 December 2019 in accordance with IFRS and § 315e of the German Commercial Code
1. General information about the Company
InVision Aktiengesellschaft, Düsseldorf (hereinafter also referred to as “InVision AG” or the “Company”), together with its subsidiaries (hereinafter also referred to as the “InVision Group” or the “Group”), develops and markets products and services in the field of workforce management and education, and is mainly active in Europe and the United States.
The Company’s registered offices are located at Speditionstraße 5, 40221 Düsseldorf, Germany. It is recorded in the Commercial Register of the Local Court of Düsseldorf under registration number HRB 44338. InVision AG has been listed in the prime standard segment of the Frankfurt Stock Exchange under securities identification number 585969 since 18 June 2007.
The IFRS consolidated financial statements are expected to be approved by the Supervisory Board of InVision AG on 25 March 2019 and then cleared for publication on 26 March 2019.
2. Basis of the accounting
Because it is listed on a regulated market, InVision AG prepares its consolidated financial statements in accordance with the International Financial Reporting Standards (IFRS). The consolidated financial statements as of 31 December 2019 were prepared in accordance with the IFRS, which were promulgated by the International Accounting Standards Board (IASB), in force on the balance sheet closing date, and applicable in the European Union. The designation “IFRS” also encompasses the still valid International Accounting Standards (IAS), as well as the interpretations of the Standing Interpretations Committee (SIC) and of the International Financial Reporting Interpretations Committee (IFRIC). The requirements prescribed under § 315e of the German Commercial Code (HGB) must also be observed. All provisions of the IFRS, IAS, IFRIC and SIC, which are valid for fiscal year ending 31 December 2019, have been applied in the consolidated financial statements.
In January 2016, the IASB published the new standard IFRS 16 “Leases”, which in particular replaces the previous leasing standard IAS 17 and the associated interpretations. The new standard introduces a uniform lease accounting model for lessees, under which rights of use and liabilities for all leases with a term of more than twelve months, provided they are not immaterial, are to be recognized in the balance sheet. A distinction is no longer made for lessees between operating leases, in which assets and liabilities are not recognised in the balance sheet, and finance leases.
The InVision Group applied IFRS 16 for the first time at the beginning of the 2019 financial year. As part of the transition, the InVision Group decided to apply the modified retrospective approach. As a result, there is no need to adjust the prior-year figures; instead, the cumulative effect of the first-time application of the standard must be recognised by adjusting retained earnings.
Instead of the rental obligations for office space previously reported under other financial obligations, the application of IFRS 16 leads to an increase in non-current assets due to the accounting for rights of use. The rights of use are amortised on a straight-line basis over the shorter of the useful life and the term of the lease. Financial liabilities also increase due to the recognition of the corresponding lease liabilities. These liabilities are measured at the present value of the remaining lease payments, discounted at the lessee’s marginal borrowing rate as of 31 December 2019. The weighted average incremental borrowing rate of the InVision Group applied to the lease liabilities as of 31 December 2019 was 1.42%. Each lease instalment is divided into repayment and financing expenses. Finance expenses are recognised in the income statement over the lease term, so that for each period a constant periodic interest rate is charged on the remaining balance of the liability.
Under otherwise unchanged conditions, the increase in total assets leads to a reduction in the equity ratio of the InVision Group.
The following tables show the main effects of the new accounting requirements of IFRS 16 for the classification and measurement of rights of use and for the accounting of current and non-current lease liabilities for the 2019 financial year.
Valuation of lease liabilities
|IFRS, in Euro||2019|
|Operating lease commitments disclosed as of 31 December 2018||2,132,759|
|Less short-term leases, which are recognised as expenses on a straight-line basis:||-1,733|
|Less leases for low-value assets, which are recognised as expenses on a straight-line basis:||-48,000|
|Less non-leasing components:||-339,900|
|Plus effect from expected future rent adjustments:||92,785|
|Plus effect from probable exercise of lease extension options:||91,344|
|Discounted at the lessee’s incremental borrowing rate at the date of first-time application of IFRS 16:||-129,064|
|Leasing liabilities reported in the balance sheet on 01.01.2019:||1,798,191|
|thereof current leasing liabilities:||172,330|
|thereof long-term leasing liabilities:||1,625,861|
The change in accounting policy affected the following balance sheet items as of 1 January 2019 as follows:
|IFRS, in Euro||2019|
|Rights of use - increase on 01 Jan 2019||1,703,842|
|Leasing liabilities – increase on 01 Jan 2019||1,798,191|
|Deferred tax assets – increase on 01 Jan 2019||28,305|
The net effect of the above adjustments was recognised in retained earnings in the amount of EUR -66,044.
With regard to the statement of comprehensive income, the depreciation of rights of use and the interest expenses for liabilities will in future be shown under other operating expenses under IFRS 16 instead of the previous rents. This will have a positive impact on operating expenses and consequently on the operating result (EBIT), and financing costs will increase due to additional interest expenses.
Effects of the first-time adoption of IFRS 16 on the consolidated statement of comprehensive income
|IFRS, in Euro||Carrying amount in
accordance with IAS 17
|Application of IFRS 16||Carrying amount in
accordance with IFRS 16
|01 Jan - 31 Dec 2019||01 Jan - 31 Dec 2019|
|Operating result (EBIT)||965,772||14,858||980,630|
|Result before taxes (EBT)||898,488||-9,559||888,929|
|Consolidated net profit||3,001,811||-6,691||2,995,120|
Effects of the first-time adoption of IFRS 16 on the consolidated cash flow statement
Previously, lease payments for operating leases were reported in full in operating cash flow. In future, lease payments made for all leases will be divided into a repayment and an interest portion. While the repayment portion is reported in the financing cash flow, the interest portion is reported in the operating cash flow. This increases the operating cash flow and reduces the financing cash flow. The net cash flow does not change. The repayment portion for leasing liabilities reported under financing cashflow for the 2019 financial year amounts to EUR 172,330.
In addition to IFRS 16, the following IAS/IFRS/IFRIC were endorsed by the EU in the 2019 financial year or are to be applied for the first time. Most of them have little or no effect on the consolidated financial statements of InVision AG.
|IFRS standards||Material effect|
|Amendments to IFRS 9, ‘Financial instruments’ – Prepayment features with negative compensation||None|
|Amendments to IAS 28, ‘Investments in associates’ - Long term interests in associates and joint ventures||None|
|Amendments to IAS 19, ‘Employee benefits’ – Plan amendment, curtailment or settlement||None|
|Annual improvements 2015-2017: IFRS 3 - ‘Business combinations’, IFRS 11 - ‘Joint ventures’, IAS 12 - ‘Income taxes’ and IAS 23 - ‘Borrowing costs’||None|
|IFRIC 23, ‘Uncertainty over income tax’||None|
The following amendments of the IASB were not applied on an early basis in these consolidated financial statements. Where the changes affect InVision AG, the future effects on the consolidated financial statements will be examined. For the most part, they have not yet been adopted by the EU.
|IFRS standards with (expected) mandatory application||Material effect|
|Amendments to IFRS 3, ‘Business combinations’, definition of a business (1 Jan 2020)||None|
|Amendments to IAS 1, ‘Presentation of financial statements’, and IAS 8, ‘Accounting policies, changes in accounting estimates and errors’, definition of material (1 Jan 2020)||None|
|Amendments to the Conceptual framework (1 Jan 2020)||None|
|IFRS 17, ‘Insurance contracts’ (1 Jan 2021)||None|
The effects on the consolidated financial statements of the other standards newly issued or revised by the IASB, which were not yet mandatory in these financial statements, are currently being examined. However, apart from any extended disclosure requirements, no material effects are expected.
3. Group of consolidated companies
The consolidated financial statements cover InVision AG as well as the following subsidiaries:
- injixo AG, Zug, Switzerland
- InVision Software, Inc., Chicago, IL, USA
- InVision Software Ltd., London, United Kingdom
- InVision Software SAS, Paris, France
- InVision Software Systems S.L., Madrid, Spain
InVision AG holds a direct 100% ownership interest in each of the consolidated subsidiaries.
4. Consolidation principles
The consolidated financial statements comprise the annual financial statements of InVision AG and its subsidiaries as of 31 December of each fiscal year. The annual financial statements of the subsidiaries are prepared while applying the uniform accounting and valuation methods as of the same balance sheet closing date as the annual financial statements of the parent company.
The balance sheet closing date of all subsidiaries integrated into the consolidated financial statements is 31 December of the applicable fiscal year in question.
All account balances, transactions, income, expenses, profits and losses from intra-group transactions, which are included in the book value of assets, are eliminated in full.
Subsidiaries are fully consolidated as of the date of their formation or acquisition (i.e., as of the date on which the Group acquires control over them), provided that they are not of minor importance for the Group’s net assets, financial position and results of operations. The inclusion of these subsidiaries in the consolidated accounts ends as soon as the parent company’s control no longer exists.
Newly-formed subsidiaries are consolidated using the acquisition method pursuant to IFRS 3. Under that method, acquisition costs of the business combination are apportioned to the identifiable assets, which are acquired, and to the identifiable liabilities, which are assumed, based on their fair values as of the date of acquisition. The expenses and income, which have accrued since the acquisition, are included in consolidated accounts.
Accounting and Valuation Principles
5. In general
The consolidated financial statements were prepared on the basis of historical acquisition or production costs (costs). Historical costs are based in general on the fair value of the consideration paid in exchange for the asset.
The consolidated balance sheet was structured according to short-term and long-term assets and liabilities. The consolidated statement of comprehensive income is prepared using the cost of production method.
6. Reporting currency
The consolidated financial statements are prepared in euro because the majority of the Group transactions are based on that currency. Unless otherwise indicated, all figures herein have been rounded up or down to the nearest thousand (TEUR, T€) in accordance with standard commercial practices. The figures are shown in euro (EUR, €), in thousand euro (TEUR, T€) or in million euro (MEUR, m€).
7. Currency translation
Each company within the Group stipulates its own functional currency. The items reported in the financial statements of each company are valued using that functional currency. Foreign currency transactions are initially converted into the functional currency at the currency spot rate applicable on the date of the transaction.
Monetary assets and liabilities denominated in a foreign currency will be converted into the functional currency at the exchange rate applicable on each relevant reporting date and recognised in the income statement. This treatment does not apply to any exchange rate differences arising from foreign currency transactions, if they are used to hedge a net investment of a foreign operation. These differences are recognised directly in equity capital until the net investment is sold, and recognised in the period results only after such sale. Any deferred taxes resulting from the currency differences of such foreign currency credits will also be recognised directly in equity capital. Non-monetary items, which are valued at historical costs in a foreign currency, are converted at the exchange rate applicable on the date of the transaction. Non-monetary items, which are reported at fair value in a foreign currency, are converted at the exchange rate applicable on the date the fair value was calculated.
Assets and liabilities of foreign operations are converted into euro as of the balance sheet (reporting) date. The conversion of income and expenses shall be made at the average exchange rate for the fiscal year. Any differences resulting from these currency conversions will be booked as a separate component of the equity capital account.
Any goodwill acquired with the purchase of a foreign operation and any adjustments in the book value of the assets and liabilities, which resulted from that transaction in order to accord with fair value, will be converted at the exchange rate applicable on the reporting date.
The following exchange rates were used (per EUR 1.00):
|Currency||Exchange rate on
reporting date 2019
|Exchange rate on
reporting date 2018
exchange rate 2019
exchange rate 2018
8. Intangible assets
Acquired intangible assets are valued at the time of their receipt according to their cost of acquisition or cost of production.
Internally produced intangible assets are recognised when they are identified and when it is likely that the group will receive a future economic benefit from the asset and the asset’s acquisition and production costs can be reliably determined. For subsequent valuations, the value of the intangible assets is recognised at the acquisition or production costs of those assets, less the accumulated amortisation and less the accumulated impairment costs (shown under the amortisation item). Intangible assets are amortised on a straight-line basis over their estimated usable life (3 to 15 years). The amortisation period and amortisation method are reviewed at the end of each fiscal year.
When producing new software and further developing existing software, the InVision Group cannot clearly and unequivocally delineate the relevant software because the knowledge and improvements gained from producing new software and from the continued development of existing software are incorporated into other InVision Group products. Since not all criteria were met by 31 December of the fiscal year, no development costs were capitalised.
9. Tangible assets
Tangible assets (land and buildings as well as computer hardware, tenant installations, furnishings and equipment) are recognised at the cost of acquisition or production less the accumulated depreciation. These assets are depreciated on a straight-line basis over the estimated useful life of the individual asset. The useful life for buildings is 9 to 33 years, for computer hardware 3 to 5 years, and for furnishings and equipment, 5 to 13 years. Tenant installations are depreciated over the term of the lease or over their useful life, if that period is shorter.
Subsequent expenditures made for a tangible asset are recognised at the costs of acquisition, if it is likely that the Group will receive a future economic benefit from it, and the costs for the asset can be reliably determined. Costs for repairs and maintenance, which do not increase the estimated useful life of the tangible asset, are recognised in the period in which they are incurred and are reported on the income statement.
10. Accounting for leases
The Group only acts as a lessee in connection with the rental of office space.
As of January 1, 2019, leases are recognised as rights of use and corresponding lease liabilities at the time when the leased asset is available for use by the Group.
Assets and liabilities from leases are initially recognised at present value.
The lease liabilities include the present value of the following lease payments:
- fixed payments (including de facto in-substance fixed payments, less any lease incentives to be received)
- variable lease payments linked to an index or (interest) rate, initially valued at the index or interest (rate) on the commitment date
- expected payments by the Group from the utilisation of residual value guarantees
- the execution price of a call option, the group is reasonably certain that it will be used
- penalties in connection with the termination of a lease, if the lease term takes into account that the Group will exercise the termination option in question
The measurement of the lease liability also includes lease payments based on a sufficiently secure utilisation of extension options.
Lease payments are discounted at the implicit interest rate underlying the lease if this can be readily determined. Otherwise - and this is generally the case in the Group - the lease is discounted at the lessee’s incremental borrowing rate, i.e. the interest rate that the respective lessee would have to pay if it had to borrow funds to acquire an asset with a comparable value in a comparable economic environment for a comparable term with comparable certainty under comparable conditions.
Lease instalments are divided into repayments and interest payments. The interest portion is recognised in the income statement over the lease term so that a constant periodic interest rate is charged on the remaining balance of the liability for each period.
Rights of use are measured at cost, which is comprised as follows:
- the amount of the initial measurement of the lease liability
- all leasing payments made at or before the provision, less any leasing incentives received
- all initial direct costs incurred by the lessee, and
- estimated costs incurred by the lessee in dismantling or removing the underlying asset, restoring the site on which it is located or returning the underlying asset to the condition required by the lease agreement.
Rights of use are amortised on a straight-line basis over the shorter of the useful life and the term of the underlying lease agreement. If the exercise of a purchase option is reasonably certain from the Group’s perspective, the asset is depreciated over the useful life of the underlying asset.
11. Borrowing costs
Borrowing costs are recognised as an expense in the period in which they are incurred, unless the borrowing costs were incurred for the purchase, construction or production of qualified assets. In that case, the borrowing costs will be added to the production costs for such assets. During the fiscal year, the InVision Group had neither acquired nor produced qualified assets.
12. Impairment of non-financial assets
Non-financial assets are tested for impairment if facts or changes in circumstances suggest that the book value of an asset might no longer be recoverable. For the impairment test, the recoverable amount of the asset or the cash-generating unit must be determined. The recoverable amount is either the fair value less the costs to sell or the value in use, whichever value is higher. The fair value less the costs to sell is defined as the price which two informed, contractually-willing and independent business partners could achieve (less the cost to sell) when selling an asset or a cash-generating unit. The value in use of an asset or a cash-generating unit is calculated by determining the present cash value of the estimated future cash flow based on the current use of the asset or unit. If the recoverable value is less than the book value, then the difference will be immediately written off and entered in the income statement.
The impairment of a particular asset (except for goodwill), which had been previously recognised to profit and loss, will be reversed, if there is evidence that the impairment no longer exists or that the amount of the impairment has declined. The recoverable amount will be recognised as income in the income statement. The recoverable amount (or the reduction in the amount of the impairment) of an asset will be recognised, however, only to the extent that it does not exceed the book value, which would have resulted had no impairment been previously recognised (including the effects from amortisation or depreciation).
13. Financial investments and other financial assets
On initial recognition, financial assets are classified for subsequent measurement either as at amortised cost or at fair value through profit or loss.
The classification of financial assets at initial recognition depends on the characteristics of the contractual cash flows of the financial assets. With the exception of trade receivables, which do not contain any significant financing components, the Group measures a financial asset at its fair value plus transaction costs. Trade receivables that do not contain a significant financing component are measured at the transaction price determined in accordance with IFRS 15. In this context, reference is made to the accounting policies in Note 18. In order for a financial asset to be classified and measured as at amortised cost or at fair value through equity in other comprehensive income, cash flows may consist solely of payments of principal and interest (SPPI) on the outstanding principal amount. This assessment is known as the SPPI test and is performed at the level of the individual financial instrument. Purchases or sales of financial assets that require delivery of the assets within a period determined by the regulations or conventions of the respective market (regular way purchases) are recognised on the trade date, i.e. the date on which the Group commits to purchase or sell the asset.
For subsequent measurement, financial assets are classified into two categories:
- financial assets measured at amortised cost (debt instruments)
- financial assets at fair value through profit or loss (not relevant for these consolidated financial statements)
The Group measures financial assets at amortised cost if both of the following conditions are met:
- The financial asset is held within the framework of a business model whose objective is to hold financial assets in order to collect the contractual cash flows; and
- the contractual terms of the financial asset result in cash flows at specified points in time that represent only principal and interest payments on the outstanding principal amount.
The Group’s financial assets measured at amortised cost mainly comprise trade receivables and receivables from banks. They also include other receivables.
Financial assets measured at amortised cost are measured in subsequent periods using the effective interest method and are tested for impairment. Gains and losses are recognised in the income statement when the asset is derecognised, modified or impaired. For trade receivables, the Group applies the simplified value adjustment scheme of IFRS 9 and directly recognises the expected default over the entire term of the receivable. The necessary value adjustment is derived taking into account historical defaults and - if relevant - adjusted on the basis of current market developments. In individual cases, however, the default is also derived directly from information on the customer’s creditworthiness. In the event of the insolvency of a customer, the full value of the receivable is reported as a loss on the receivable. Only at this point the receivable is derecognised. In principle, changes in the carrying amount of trade receivables from customers are reduced using an allowance account and the impairment loss is recognised in profit or loss. If the amount of an estimated impairment loss increases or decreases in a subsequent reporting period as a result of an event occurring after the impairment was recognised, the previously recognised impairment loss is increased or decreased through profit or loss by adjusting the allowance account. If a derecognised receivable is subsequently reclassified as recoverable as a result of an event occurring after derecognition, the corresponding amount is recognised immediately against other operating expenses.
14. Cash and cash equivalents
Cash and cash equivalents consist of credit balances held with financial institutions as well as securities which may be redeemed for cash on short notice. Bank balances are measured at amortised cost. In this context, reference is made to the accounting policies in Note 13.
The actual tax refund claims and tax debts for the current period and for earlier periods must be valued at the amount at which a refund is expected from the tax authorities or a payment must be made to the tax authorities.
Deferred taxes are recognised under the liabilities method for all temporary differences between the tax basis of the assets / liabilities and their respective book values in the IFRS financial statements.
Deferred taxes are valued according to the tax rates (and tax regulations), which are effective as of the balance sheet closing date or which have for the most part been enacted into law, and which are expected to be valid and binding on the date the deferred tax receivable is realised and/or the deferred tax liability is settled.
Deferred tax receivables, including those on losses carried forward, are recognised in an amount at which it is likely that taxable income will be available for crediting against the temporary differences.
The valuation of deferred tax assets for loss carry-forwards and for deductible temporary differences depends on the future taxable earnings of the InVision Group companies. The estimate regarding such taxable earnings is made as of the balance sheet date taking into account the respective business perspectives. For purposes of capitalising deferred taxes based on the losses carried forward, only those tax loss carry-forwards will be recognised, which are very likely to be applied.
A provision is shown only if the Company has a present, statutory or de facto obligation (liability) based a past event, if it is likely that the fulfilment of the obligation will lead to an outflow of funds representing an economic benefit, and if a reliable estimate of the amount of the obligation can be made. If no provision could be created because one of the criteria mentioned was not fulfilled, then the liabilities in question will be reported as contingent liabilities.
Provisions are examined on each balance sheet closing date and adjusted to accord with the best estimate as of that date. If there is an expectation that the expenditures, which are required to satisfy a deferred liability, will be reimbursed either in whole or in part by another party, then the reimbursement will be recognised only when it is nearly certain that the Group will receive the reimbursement.
17. Financial liabilities
Liabilities include non-current liabilities to banks, trade payables, tax liabilities, interest liabilities, liabilities to employees and other liabilities. On initial recognition, they are carried at cost, which corresponds to the fair value of the consideration received. In subsequent years, all liabilities are measured at amortised cost using the effective interest method in accordance with IFRS 9. They are derecognised when the liability is settled, cancelled or expires.
Since the 2019 financial year, liabilities from leases are reported under financial liabilities. Please refer to the explanations in section 10 for the accounting policies applied.
18. Revenue and cost recognition
The InVision Group’s revenues are generated by granting rights of use to software products (unlimited use, one-time use, time-limited use) and by providing related services.
In case of unlimited or one-time use rights, the revenues are recognised completely at the point in time of the granting of rights of use. In case of time-limited rights, revenues are recognised on a straight-line basis pro rata temporis over the time for which they were calculated. Revenues from services are recognised at the point in time the service is provided.
The revenues are reported less any early payment discounts, customer bonuses and rebates. Agreements with several components (e.g. subscriptions and services) are internally allocated to their individual components, and revenues are recognised on the basis of those individual components.
Revenues are generally recognised when the sales price is determined or determinable, no significant duties exist and the collection of the receivables is likely. Costs are recognised when the good or service is used or at the time they were generated. Interest is recognised as either an expense and/or income according to the period in which it arose under the effective interest method.
19. Contingent liabilities and contingent receivables
Contingent liabilities are either potential obligations, which could result in an outflow of resources but the existence of which must be confirmed through the occurrence or non-occurrence of one or more future events, or current obligations, which do not satisfy the recognition criteria of the liability. These items are listed separately in the notes, unless the possibility that resources with economic benefits will be lost is unlikely. There were no contingent liabilities in the fiscal year.
In connection with business combinations, contingent liabilities are recorded as liabilities on the balance sheet pursuant to IFRS 3.37, if the fair value can be reliably calculated.
Contingent receivables are not recognised in the financial statements. They are, however, listed in the notes, if the receipt of economic benefits is likely.
20. Management discretion and the main sources of forecasting uncertainty
When preparing the consolidated financial statements, some assumptions and estimates must be made, which have an effect on the amount and reporting of the recognised assets and liabilities, the income and expenses, and the contingent liabilities for the reporting period. These assumptions relate primarily to the assessment of the carrying value of assets, the assessment of deferred tax assets, uniform group determination of the economic useful lives of tangible assets, and the recognition and measurement of provisions. The assumptions and estimates are based on premises delivered from available information at the time in question. The basis for the anticipated future business development is the circumstances present at the time the consolidated financial statements are prepared in a realistic scenario of the future development of the overall environment. If these overall conditions deviate from the assumptions made and cannot be influenced by management, then the resulting figures could deviate from the originally anticipated estimates.
Notes to the Consolidated Balance Sheet
21. Liquid funds (cash and cash equivalents)
Liquid funds contain only those payment instruments, which have a term to maturity of less than three months calculated from the date of purchase. As in the previous year, cash and cash equivalents consist solely of credit balances held with financial institutions.
22. Trade receivables
The trade receivables (net) subject to the impairment provisions of IFRS 9 have a remaining term of up to one year and are composed as follows:
|31 Dec 2019||31 Dec 2018|
|Bad debt allowances||-12||-23|
23. Income tax claims
Income tax refund claims include refund claims of InVision Software SAS, Paris, France.
24. Prepaid expenses and other short-term assets
|31 Dec 2019||31 Dec 2018|
|Prepaid and deferred items||136||124|
|Other miscellaneous assets||0||5|
The deferred income mainly consists of prepayments for service and insurance contracts as well as for business travel expenses with benefits received for the following financial year.
25. Intangible assets
Intangible assets consist primarily of software and industrial property rights acquired in exchange for consideration. These assets are valued at their historical cost of acquisition, less the scheduled amortisation. With respect to scheduled amortisation, the software acquired in exchange for consideration and the industrial property rights were amortised over their expected useful lives (3 to 15 years).
26. Tangible assets
The breakdown of tangible assets is as follows:
|31 Dec 2019||31 Dec 2018|
|Land and property / Buildings||7,320||7,514|
|Other miscellaneous assets||1,617||1,687|
|Assets under construction||0||98|
Tangible assets are recognised at their historical costs of acquisition, less any scheduled depreciation if the assets are subject to wear and tear. Tangible assets are depreciated on a straight-line basis over their useful lives (3 to 33 years). The carrying value of the tangible assets is subject to impairment testing. None of the assets have been subject to non-scheduled depreciation.
27. Development of the long-term assets
|Fiscal year 2019||01 Jan 2019||Additions||Transfers||Disposals||Currency differences||31 Dec 2019|
|1. Concessions, industrial property rights and similar rights and assets as well as licences to such rights and assets|
|2. Tangible Assets|
|Land and property / Buildings|
|Other miscellaneous assets|
|3. Assets under construction|
|Total long-term assets|
|Fiscal year 2018||01 Jan 2018||Additions||Disposals||Currency differences||31 Dec 2018|
|1. Concessions, industrial property rights and similar rights and assets as well as licences to such rights and assets|
|2. Tangible Assets|
|Land and property / Buildings|
|Other miscellaneous assets|
|3. Assets under construction|
|Total long-term assets|
28. Rights of use
As a result of the first-time application of IFRS 16 as of 1 January 2019, the rights of use of rented office space for the Leipzig and Paris locations were recognised. For more detailed information on the first-time application of IFRS 16, please refer to sections 2 and 10.
29. Deferred taxes
The following table sets forth the status of the deferred tax assets according to the balance sheet items:
|31 Dec 2019||31 Dec 2018|
|Deferred taxes based on temporary differences from a license transfer within the Group||3,450||0|
|Deferred taxes based on temporary differences from the application of IFRS 16||31||0|
|Deferred taxes based on temporary differences from licence valuations||0||20|
The Group’s tax losses carried forward as of 31 December 2019 totalled TEUR 6,194 (previous year: TEUR 10,361). For the the above mentioned losses carried forward no deferred taxes were recognised as the realisation is considered insufficient. Valued at individual tax rates, deferred taxes of up to TEUR 1,734 could have been recognised.
30. Other long-term assets
Other long-term assets consist only of security deposits paid for leased office space.
31. Short-term Liabilities
The short-term liabilities are allocated as follows:
|Income tax liabilities||1,202||223|
|Customer contract liabilities||571||580|
|Liabilities to financial institutions||480||250|
|Liabilities from leasing contracts||177||0|
The customer contract liabilities are invoice amounts already recorded for subscription services in the respective following year.
32. Liabilities due to credit institutions
In order to refinance investments and make further investments, InVision AG has taken out a bank loan of TEUR 6,000 secured by a land charge. Of this amount, the company has drawn down TEUR 1,000 by the end of the current fiscal year. The repayment schedule provides for repayment of TEUR 480 in the course of the 2020 financial year. The remaining part of the loan is reported under long-term liabilities due to credit institutions.
33. Leasing liabilities
The portion of lease liabilities classified as current was TEUR 177 as of the balance sheet date. Due to the first-time application of IFRS 16 as of January 1, 2019, and the application of the modified retrospective method, no prior-year comparison value is shown.
34. Trade Payables
Trade payables show a balance of TEUR 162 and are lower than at the same time last year due to the balance sheet date.
35. Income tax liabilities and provisions
Income tax liabilities and provisions developed as follows:
|01 Jan 2019||Utilisation||Reversal||Allocation||Currency Difference||31 Dec 2019|
|Income tax liabilities||223||110||0||1,088||1||1,202|
|- Personnel expenses||73||29||0||28||0||72|
|- Annual accounts costs||87||87||0||91||1||92|
|- Outstanding invoices||48||32||4||21||1||34|
|- Trade associations||20||20||0||20||0||20|
|01 Jan 2018||Utilisation||Reversal||Allocation||Currency Difference||31 Dec 2018|
|Income tax liabilities||406||406||0||223||0||223|
|- Personnel expenses||104||104||0||73||0||73|
|- Annual accounts costs||79||78||1||87||0||87|
|- Outstanding invoices||14||12||2||48||0||48|
|- Trade associations||17||17||0||20||0||20|
36. Customer contract liabilities and other liabilities
Customer contract liabilities and other liabilities are short-term and are allocated as follows:
|Customer contract liabilities||571||580|
|Social security charges||23||33|
|Value added tax||2||29|
|Other miscellaneous liabilities||4||2|
The payments that the Group has received from customers for which services are still to be rendered over a certain period in the future were deferred as customer contract liabilities.
37. Liabilities due to credit institutions
The share of amounts due to credit institutions classified as non-current amounted to TEUR 520 on the balance sheet date.
38. Leasing liabilities
The portion of leasing liabilities classified as non-current amounted to TEUR 1,449 as of the balance sheet date. Due to the first-time application of IFRS 16 as of January 1, 2019, and the application of the modified retrospective method, no prior-year comparison value is shown.
39. Subscribed capital
The registered share capital of InVision AG is reported as the subscribed capital. The subscribed capital is divided into 2,235,000 no-par value shares (Stückaktie), each such share representing a notional amount of EUR 1.00 of the Company’s registered share capital. At the end of the reporting period, the Company holds no treasury shares.
The Executive Board is authorised, with the consent of the Supervisory Board, to increase the registered share capital one or more times by up to EUR 1,117,500 (Authorised Capital Account 2015) on or before 17 May 2020.
Pursuant to the shareholder resolution adopted on 18 May 2015, the registered share capital was conditionally increased by up to EUR 1,117,500 (Conditional Capital Account 2015). Pursuant to a shareholder resolution also adopted on 18 May 2015, the Company was authorised to buy-back its own shares in a quantity representing up to 10 percent of the registered share capital as it existed at the time the resolution was adopted. The authorisation will remain in effect until 17 May 2020.
The reserves include net proceeds, IPO costs (while factoring in tax effects), purchase and sale of the Company’s own treasury shares and capital increases from company funds.
41. Equity capital difference based on currency conversion
The equity difference from currency conversion is a result of converting on the basis of the modified closing date method [modifizierte Stichtagsmethode]. The difference arises from conversion of the items on the income statement of those subsidiaries, which rendered their accounts in a foreign currency, at the average exchange rate and the conversion of the items of equity capital of those subsidiaries at the historical rate of the initial consolidation, on the one hand, and the exchange rate on the reporting date [Stichtagskurs] for the conversion of other assets and liabilities, on the other hand.
Notes to the Consolidated Statement of Comprehensive Income
Revenues are categorised as follows:
|By Business Activities||2019||2018|
The breakdown of revenues by region is based on the location of the company recording the revenues.
43. Other operating income
Other operating income of TEUR 133 (previous year: TEUR 115) mainly includes compensation in kind from employee meals, revenue from the sale of IT hardware and income relating to other periods.
44. Cost of materials
Expenses for support services provided by external employees, which were recognised under cost of materials until the end of the 2018 financial year, will in future be reported under other operating expenses. The prior-year figures have been adjusted accordingly: For the 2018 financial year, TEUR 165 were reclassified from cost of materials to other operating expenses.
45. Personnel expenses
Personnel expenses consisted of the following:
|Wages and salaries||6,903||7,387|
|Social charges and other pension provisions||1,259||1,308|
|- of which for pensions (direct insurance)||48||58|
The direct insurance policies are classified as a defined contribution plan.
46. Depreciation and amortisation of tangible and intangible assets
Of the depreciation and amortisation reported, TEUR 182 (previous year: TEUR 0) relates to the rights of use to be capitalised under IFRS 16 since the beginning of the 2019 financial year. Please refer to Sections 2 and 10 for further information on the accounting treatment of leases.
No tangible or intangible assets were subject to impairment. Thus, only scheduled amortisation and depreciation is shown under this item.
47. Other operating expenses
Other operating expenses are itemised as follows:
|Office space expenses||370||688|
|Other personnel expenses||166||186|
|Supervisory Board remuneration||56||56|
|Costs for education and seminars||42||87|
|Receivable write-offs and bad debt allowances||18||25|
|Other miscellaneous expenses||224||346|
Expenses for support services provided by external employees, which were reported under cost of materials in the previous year, were reported under other operating expenses in fiscal year 2019. The previous year’s figures have been adjusted accordingly: For fiscal year 2018, TEUR 165 was reclassified from cost of materials to consulting expenses under other operating expenses.
The first-time adoption of IFRS 16 in the 2019 financial year lead to a reduction of TEUR 197 within the cost reported under other operating expenses. No adjustment was made to the comparative figures for the previous year. The cumulative effect of the first-time application of the standard was recognised by adjusting the retained earnings. For more detailed information on the first-time application of IFRS 16, please refer to sections 2 and 10.
48. Research and development
Research and development expenses amounted to TEUR 5,650 in the fiscal year (previous year TEUR 6,301).
49. Financial result
The financial result is divided into the following
|Interest and similar expenses||-108||-12|
Debt capital costs are recognised as an expense in the period in which they are incurred.
50. Income taxes
Income taxes are divided as follows:
For details of the deferred tax assets recognised, please refer to the previous section 29. Deferred taxes are calculated on the basis of an income tax rate of 30% for the German corporation and the future local tax rate for the foreign subsidiaries.
The actual tax rate is computed as follows:
|Consolidated net income before taxes||889||225|
|Actual tax rate||-237%||206%|
The difference between the theoretical income tax expense (when applying the tax rate applicable to the InVision Group) and the reported income tax expense may be attributed to the following causes:
|Result before income tax||889||225|
|Theoretical income tax expense based on the tax rate of the parent company||267||67|
|Effects of losses carried forward||-893||-213|
|International tax rate differences||-623||562|
|Other tax effects||-857||46|
The international tax rate differences are mainly due to the results of the subsidiary injixo AG, Zug, Switzerland. In addition to non-tax-deductible expenses and non-taxable income, the other tax effects include the tax effects from the sale of the software of injixo AG, Zug, Switzerland, to InVision AG, which is to be eliminated as an intra-group transaction, but is included in the values in the tax balance sheet.
Notes to the Consolidated Cash Flow Statement
The cash flow statement shows changes in the cash position of the InVision Group in the fiscal year due to incoming and outgoing cash payments. Under IAS 7, cash flow is distinguished between cash flow from operating activities, cash flow from investing activities and cash flow from financing activities.
The net financial position, as reflected in the cash flow statement, consists of all liquid funds, which are reported on the balance sheet (i.e., cash on hand and credit balances at financial institutions) and which can be reduced to cash within three months (calculated from the date acquired) without causing any significant fluctuation in value, less any short-term financial liabilities. The cash flows from investing and financing activities are computed directly (i.e., on a cash basis). In contrast, cash flow from operating activities is derived indirectly from the results for the period. Cash flow from operating activities includes the following incoming and outgoing payments:
|Income taxes received||251||49|
|Income taxes paid||-394||-841|
The net financial position shown in the cash flow statement represents total liquid funds as reported in the consolidated cash flow statement.
51. Financial assets and liabilities
The financial liabilities existing in the Group consist of a loan to refinance investments and to make further investments, liabilities from leases and current trade payables. The significant financial assets of the Group consist of cash and cash equivalents and accounts receivable. The book value of these positions, represents the maximum default risk and totals TEUR 3,775 (previous year: TEUR 2,068). Business relationships are established with creditworthy contracting parties (counter-parties) only. In order to evaluate the creditworthiness of counter-parties (above all, large customers), the Group relies on available financial information and on its own internal trading records. The Group holds trade receivables against a number of customers from a wide range of industries and regions. Credit assessments regarding the financial strength of the receivables are constantly performed. The typical terms of payment granted (with no discounts or deductions) are 30 days. With respect to all trade receivables, which were overdue by more than 45 days as of the balance sheet date and involve a default risk, bad debt allowances were created.
The Group did not execute any derivatives or hedging transactions. Reclassifications were not made either in 2019 or in 2018 as a result of the reclassification as part of the transition to IFRS 9.
There were no significant differences between the book value of the financial assets and liabilities reported and the fair values.
52. Capital risk management
The Group manages its capital (equity capital plus debt capital less cash and cash equivalents) with the goal of using financial flexibility to achieve its growth targets while at the same time optimising its financing costs. The overall capital management strategy has remained the same as in the previous year.
Management reviews the capital structure at least once each half-year. The review covers the costs of capital, the security and collateral provided, and the open credit lines and credit opportunities.
During the reporting year, the capital structure may be shown as follows:
|31 Dec 2019||31 Dec 2018|
|- as a percentage of total capital||72%||84%|
|- as a percentage of total capital||28%||16%|
|- as a percentage of total capital||17%||16%|
(*) calculated as the ratio of liabilities (less any cash and cash equivalents) to equity capital
The Group’s equity ratio target is 50 percent.
53. Finance risk management
The monitoring of finance risk is handled by management on a centralised basis. Individual financial risks are generally reviewed at least once each quarter.
The Group’s primary risks resulting from financial instruments involve liquidity and credit risks. As a rule, business transactions are executed only with creditworthy contracting parties. Moreover, the amounts of any receivables are constantly monitored in order to avoid exposing the InVision Group to any significant credit risk. The maximum default risk is limited to the book value of the asset as reported in the balance sheet.
The Group manages liquidity risks by holding adequate reserves, monitoring and maintaining credit agreements, and planning and coordinating incoming and outgoing payments.
54. Market risks
Market risks can arise from changes in exchange rates (currency risk) or interest rates (interest risk). Given the limited relevance these risks have for the Group, the Group has not heretofore hedged such risks using derivative financial instruments. These risks are managed through constant monitoring. Currency risks are largely avoided by virtue of the fact that the Group invoices primarily in euro or in the local currency. As of the balance sheet date, the receivables denominated in foreign currencies equalled TEUR 472 (previous year: TEUR 362) and the payables denominated in foreign currencies equalled TEUR 44 (previous year: TEUR 130). Had the euro appreciated by 10 percent compared to other currencies relevant to the Group as of 31 December 2019, then the pre-tax result would have been TEUR 21 (previous year: TEUR 32) lower.
55. Transactions between related parties
There were no transactions involving goods and services between closely related enterprises and persons, neither in the reporting period or the previous year.
56. Events after the balance sheet closing date
After the close of the fiscal year, no further specific transactions occurred, which would be of material importance for the consolidated financial statements.
57. Number of employees
In 2019 fiscal year, the Company employed on average 107 employees (previous year: 121), not including the Executive Board.
58. Information on the Company’s governing bodies
The following person was members of the Executive Board in the fiscal year:
- Peter Bollenbeck (Chairman), Düsseldorf
In the fiscal year, the Executive Board members received the following remuneration benefits:
|of which fixed salary||360,000||360,000|
|of which other benefits||4,426||4,015|
As of the balance sheet date, the Executive Board holds, either directly or indirectly, 33.13 percent of the Company’s registered share capital (31 December 2018: 30.8 percent).
The Supervisory Board consists of:
- Dr. Thomas Hermes (Chairman), Attorney at Law and Notary, Essen
- Matthias Schroer (Deputy Chairman), Entrepreneur, Maurach, Austria
- Prof. Dr. Wilhelm Mülder, University Professor, Essen
Dr. Thomas Hermes is the supervisory board chairman of the registered housing association known as Wohnungsgenossenschaft Essen-Nord e.G., Essen, member of the supervisory board of Rot-Weiss Essen e.V., member of the respective board of trustees of Politisches Forum Ruhr e.V., Essen, and of Sankt-Clemens-Maria-Hofbauer-Stiftung, Essen. Matthias Schroer and Prof. Dr. Wilhelm Mülder do not sit on any other supervisory boards.
The remuneration of the Supervisory Board, paid as fixed remuneration, consists of the following:
|Dr. Thomas Hermes||25,000||25,000|
|Prof. Dr. Wilhelm Mülder||12,500||12,500|
|Total compensation Supervisory Board||56,250||56,250|
Otherwise in the fiscal year, the Supervisory Board members were not granted any loans or provided any advances for future payments, and no contingent liabilities were incurred for the benefit of such persons.
59. Information on the fees of the Company auditors
The fee for the Company’s annual accounts auditor, which was recognised for fiscal year 2019, consists of the following:
|Auditing service for the annual accounts||53||48|
|Tax advisory services||5||4|
60. Information on segment reporting
Since the internal and external business processes for all products and services are to the largest extent identical, they collectively represent a single operating segment within the meaning of IFRS 8.
61. Proposal for the Appropriation of Profit
The Executive Board and the Supervisory Board propose to carry forward the net profit to new account.
62. Statement under § 161 of the German Stock Corporation Act
On 24 January 2020, the Executive Board and Supervisory Board issued a statement under § 161 of the German Stock Corporation Act regarding the extent to which it has elected to comply with the recommendations of the “Government Commission of the German Corporate Governance Code” and published this statement on the internet at www.ivx.com/en/investors/corporate-governance/compliance-statement.
63. Responsibility statement by the Executive Board
To the best of our knowledge and in accordance with the applicable reporting principles for financial reporting, the consolidated financial statements give a true and fair view of the Group’s assets, liabilities, financial position and results of operation, and the Group’s management report includes a fair review of the development and performance of the business, together with a description of the principal opportunities and risks related to the anticipated development of the Group for the remainder of the fiscal year.
Düsseldorf, 16 March 2020