Consolidated Notes

to the Consolidated Financial Statements of InVision AG as of 31 December 2020 in accordance with IFRS and § 315e of the German Commercial Code

General Information

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 23 March 2021 and then cleared for publication on 25 March 2021.

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 2020 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 2020, have been applied in the consolidated financial statements.

The following IAS/IFRS/IFRIC were endorsed by the EU in the 2020 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
Changes to the accounting framework	None
Amendments to IAS 1 “Presentation of Financial Statements” and IAS 8 “Accounting Policies, Changes in Accounting Estimates and Errors” - Definition of Materiality	None
Amendments to IFRS 9 “Financial Instruments”, IAS 39 “Financial Instruments: Recognition and Measurement” and IFRS 7 “Financial Instruments: Disclosures” - Reform of reference interest rates	None
Amendments to IFRS 3 “Business Combinations” - Definition of a Business Operation	None
Amendments to IFRS 16 “Leases” - Lease concessions related to the coronavirus pandemic	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
IFRS 17 “Insurance Contracts“ (1 Jan 2023)	None
Amendments to IAS 1 “Presentation of Financial Statements” (1 Jan 2023)	None
Amendments to IFRS 3 “Business Combinations” (1 Jan 2022)	None
Amendments to IAS 16 “Property, Plant and Equipment” (1 Jan 2022)	None
Amendments to IFRS 37 “Provisions, Contingent Liabilities and Contingent Assets” (1 Jan 2022)	None
Annual Improvements to IFRSs (2018-2020 cycle) - Amendments to IFRS 1 “First-time Adoption of International Financial Reporting Standards”, IFRS 9 “Financial Instruments” and IAS 41 “Agriculture” (1 Jan 2022)	None
Amendments to IFRS 4 “Insurance Contracts” (1 Jan 2022)	None
Amendments to IFRS 9 “Financial Instruments”, IAS 39 “Financial Instruments: Recognition and Measurement”, IFRS 7 “Financial Instruments: Disclosures”, IFRS 4 “Insurance Contracts” and IFRS 16 “Leases” (1 Jan 2022)	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 B.V., Utrecht, Netherlands

InVision Software B.V. was founded on April 21, 2020, and entered in the Dutch Commercial Register on April 22, 2020. The company was included in the scope of consolidation as of the same date.

InVision Software Systems S.L., Madrid, Spain, is in insolvency proceedings and has been deconsolidated in fiscal year 2020.

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 2020	Exchange rate on reporting date 2019	Average annual exchange rate 2020	Average annual exchange rate 2019
USD	1.2264	1.1215	1.1414	1.1194
GBP	0.8984	0.8505	0.8892	0.8769
CHF	1.0822	1.0853	1.0701	1.1122

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.

15. Taxes

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.

16. Provisions

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 2020	31 Dec 2019
Trade receivables	996	1,171
Bad debt allowances	-1	-12
Total	995	1,159

23. Income tax claims

Income tax assets include refund claims of InVision AG, Düsseldorf, Germany, InVision Software Ltd., London, United Kingdom, and InVision Software SAS, Paris, France.

24. Prepaid expenses and other short-term assets

	31 Dec 2020	31 Dec 2019
Prepaid and deferred items	219	136
Other miscellaneous assets	21	0
Total	240	136

The deferred income mainly consists of prepayments for service and insurance contracts 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 2020	31 Dec 2019
Land and property / Buildings	7,126	7,320
Other miscellaneous assets	1,447	1,617
Total	8,573	8,937

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 2020	01 Jan 2020	Additions	Transfers	Disposals	Currency differences	31 Dec 2020
1. Concessions, industrial property rights and similar rights and assets as well as licences to such rights and assets
Gross	721	12	0	0	-56	677
Value adjustment	423	43	0	0	-36	430
Net	298	-31	0	0	-20	247
2. Tangible Assets
Land and property / Buildings
Gross	8,393	0	0	0	0	8,393
Value adjustment	1,073	194	0	0	0	1,267
Net	7,320	-194	0	0	0	7,126
Other miscellaneous assets
Gross	2,761	68	0	57	-4	2,768
Value adjustment	1,144	238	0	57	-4	1,321
Net	1,617	-170	0	0	0	1,447
Total long-term assets
Gross	11,875	80	0	57	-60	11,838
Value adjustment	2,640	475	0	57	-40	3,018
Net	9,235	-395	0	0	-20	8,820

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
Gross	1,279	0	0	571	13	721
Value adjustment	944	43	0	571	7	423
Net	335	-43	0	0	6	298
2. Tangible Assets
Land and property / Buildings
Gross	8,393	0	0	0	0	8,393
Value adjustment	879	194	0	0	0	1,073
Net	7,514	-194	0	0	0	7,320
Other miscellaneous assets
Gross	2,612	155	98	105	1	2,761
Value adjustment	925	317	0	99	1	1,144
Net	1,687	-162	98	6	0	1,617
3. Assets under construction
Gross	98	0	-98	0	0	0
Value adjustment	0	0	0	0	0	0
Net	98	0	-98	0	0	0
Total long-term assets
Gross	12,382	155	0	676	14	11,875
Value adjustment	2,748	554	0	670	8	2,640
Net	9,634	-399	0	6	6	9,235

28. Rights of use

	2020	2019
As of 01 January	1,522	1,704
Revaluation due to rent increases	50	0
Depreciation	-188	-182
Total	1,384	1,522

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.

29. Deferred taxes

The following table sets forth the status of the deferred tax assets according to the balance sheet items:

	31 Dec 2020	31 Dec 2019
Deferred taxes based on temporary differences from a license transfer within the Group	2,760	3,450
Deferred taxes based on temporary differences from the application of IFRS 16	34	31
Total	2,794	3,481

The Group’s tax losses carried forward as of 31 December 2020 totalled TEUR 5,700 (previous year: TEUR 6,194). 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 1,197 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:

	2020	2019
Liabilities to financial institutions	960	480
Income tax liabilities	817	1,202
Customer contract liabilities	551	571
Provisions	209	239
Liabilities from leasing contracts	186	177
Trade payables	94	162
Other liabilities	298	288
Total	3,115	3,119

The customer contract liabilities are invoice amounts already recorded for subscription services in the respective following year.

32. Liabilities due to credit institutions

In 2018, InVision AG took out a bank loan secured by a land charge in the amount of TEUR 6,000 to refinance investments and to make further investments. Of this amount, TEUR 5,000 was drawn down by the company in the current financial year (previous year: TEUR 1,000). Since the third quarter of 2020, the loan has been repaid quarterly in the amount of TEUR 240. The repayment schedule provides for a repayment of TEUR 960 in the course of the 2021 financial year. The remaining portion of the loan is reported under long-term liabilities to credit institutions.

33. Leasing liabilities

The portion of lease liabilities classified as current according to IFRS 16 was TEUR 186 as of the balance sheet date (previous year TEUR 177).

34. Trade Payables

Trade payables show a balance of TEUR 94 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 2020	Utilisation	Reversal	Allocation	Currency Difference	31 Dec 2020
Income tax liabilities	1,202	415	0	31	-1	817
Provisions for:
- Personnel expenses	72	72	0	42	0	42
- Annual accounts costs	92	91	0	98	-1	98
- Outstanding invoices	34	17	12	22	-1	26
- Trade associations	20	20	0	20	0	20
- Other	21	17	0	19	0	23
Total provisions	239	217	12	201	-2	209
Total	1,441	632	12	232	-3	1,026

	01 Jan 2019	Utilisation	Reversal	Allocation	Currency Difference	31 Dec 2019
Income tax liabilities	223	110	0	1,088	1	1,202
Provisions for:
- 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
- Other	149	83	63	17	1	21
Total provisions	377	251	67	177	3	239
Total	600	361	67	1,265	4	1,441

36. Customer contract liabilities and other liabilities

Customer contract liabilities and other liabilities are short-term and are allocated as follows:

	2020	2019
Customer contract liabilities	551	571
Other taxes	153	153
Payroll tax	113	106
Social security charges	30	23
Value added tax	2	2
Other miscellaneous liabilities	0	4
Total	849	859

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 4,560 (previous year: TEUR 520) on the balance sheet date.

38. Leasing liabilities

The portion of leasing liabilities classified as non-current according to IFRS 16 amounted to TEUR 1,310 as of the balance sheet date (previous year: TEUR 1,449).

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 2020) on or before 28 May 2025.

Pursuant to the shareholder resolution adopted on 29 May 2020, the registered share capital was conditionally increased by up to EUR 1,117,500 (Conditional Capital Account 2020). Pursuant to a shareholder resolution also adopted on 29 May 2020, 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 28 May 2025.

40. Reserves

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

42. Revenues

Revenues	2020	2019
Total	12,752	12,618

In the second half of 2020, the Company merged the development and sales organisations of the two product areas “Workforce Management” and “Education”, and therefore no longer publishes the respective revenue shares.

Revenues by region are categorised as follows:

By Regions	2020	2019
Germany	6,225	3,747
Foreign countries	6,527	8,871
Total	12,752	12,618

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 65 (previous year: TEUR 133) 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 project-specific services provided by independent contractors amount to TEUR 0.5 (previous year: TEUR 3).

45. Personnel expenses

Personnel expenses consisted of the following:

	2020	2019
Wages and salaries	7,354	6,903
Social charges and other pension provisions	1,349	1,259
Total	8,703	8,162
- of which for pensions (direct insurance)	54	48

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 188 (previous year: TEUR 182) relates to the rights of use to be capitalised under IFRS 16 since the beginning of the 2019 financial year.

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:

Other operating expenses	2020	2019
Cloud services	768	762
Consulting costs	447	407
Office space expenses	293	370
Marketing costs	223	233
Travel expenses	78	366
Recruitment costs	75	68
Insurance costs	74	66
Other personnel expenses	58	166
Supervisory Board remuneration	56	56
Communication expenses	55	90
Costs for education and seminars	10	42
Receivable write-offs and bad debt allowances	9	18
Other miscellaneous expenses	170	224
Total	2,316	2,868

The expenses for online advertising activities reported under cloud services until the last financial year were reclassified to marketing expenses. For reasons of better comparability, the prior-year comparative figures have been adjusted and TEUR 44 reclassified accordingly.

48. Research and development

Research and development expenses amounted to TEUR 5,282 in the fiscal year (previous year TEUR 5,650).

49. Financial result

	2020	2019
Interest and similar expenses	-107	-108

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:

	2020	2019
Income tax	73	-1,327
Deferred tax	-687	3,433
Total	-614	2,106

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:

	2020	2019
Consolidated net income before taxes	986	889
Income tax	614	-2,106
Actual tax rate	62%	-237%

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:

	2020	2019
Result before income tax	986	889
Theoretical income tax expense based on the tax rate of the parent company	296	267
Effects of losses carried back / carried forward	-185	-893
International tax rate differences	-213	-623
Other tax effects	716	-857
Total	614	-2,106

In addition to non-tax-deductible expenses and non-taxable income, the other tax effects mainly include the development of deferred taxes from the sale of the software of injixo AG, Zug, Switzerland, to InVision AG in 2019, which is to be eliminated as an intra-group transaction but is recognised in the values of 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:

	2020	2019
Interest received	0	4
Interest paid	-107	-112
Income taxes received	0	251
Income taxes paid	-634	-394

The net financial position shown in the cash flow statement represents total liquid funds as reported in the consolidated cash flow statement.

Other Information

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 8,786 (previous year: TEUR 3,775). 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 2020 or in 2019 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 2020	31 Dec 2019
Equity capital	13,413	13,125
- as a percentage of total capital	60%	72%
Liabilities	8,985	5,088
- as a percentage of total capital	40%	28%
Short-term liabilities	3,115	3,119
- as a percentage of total capital	14%	17%
Net gearing*	9%	19%

(*) 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 208 (previous year: TEUR 472) and the payables denominated in foreign currencies equalled TEUR 50 (previous year: TEUR 44). Had the euro appreciated by 10 percent compared to other currencies relevant to the Group as of 31 December 2020, then the pre-tax result would have been TEUR 13 (previous year: TEUR 21) 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 2020 fiscal year, the Company employed on average 113 employees (previous year: 107), not including the Executive Board.

58. Information on the Company’s governing bodies

The following person was a member of the Executive Board in the fiscal year:

• Peter Bollenbeck (Chairman), Düsseldorf, Germany

In the fiscal year, the Executive Board member received the following remuneration benefits:

In EUR	2020	2019
Peter Bollenbeck	364,695	364,426
of which fixed salary	360,000	360,000
of which other benefits	4,695	4,426

As of the balance sheet date, the Executive Board holds, either directly or indirectly, 35.14 percent of the Company’s registered share capital (31 December 2019: 33.13 percent).

The Supervisory Board consists of:

• Dr. Thomas Hermes (Chairman), Attorney at Law and Notary, Essen, Germany
• Matthias Schroer (Deputy Chairman), Entrepreneur, Maurach, Austria
• Prof. Dr. Wilhelm Mülder, University Professor, Essen, Germany

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:

In EUR	2020	2019
Dr. Thomas Hermes	25,000	25,000
Matthias Schroer	18,750	18,750
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 2020, consists of the following:

	2020	2019
Auditing service for the annual accounts	53	53
Tax advisory services	9	5
Total	62	58

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 27 January 2021, 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, 19 March 2021

Peter Bollenbeck