Annual Report 2021
FINEOS Corporation Holdings plc
ARBN 633 278 430
ii
FINEOS Corporation Holdings plc
Contents
Chairman and CEO’s Report
Board of Directors
Directors’ Report
Remuneration and Nomination Committee Report
Directors’ Responsibilities Statement
Independent Auditor’s Report
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
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4
6
13
19
20
28
29
Company Statement of Financial Position
Consolidated Statement of Changes in Equity
Company Statement of Changes in Equity
Consolidated Statement of Cash Flows
Company Statement of Cash Flows
Notes to the Consolidated Financial Statements
Additional Security Holder Information
Company Information
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Annual Report 2021
Annual Report 2021
1
1
Chairman and CEO’s Report
Dear Securityholder,
We are pleased to update you on the
outcome and performance of our business
for our fiscal year ended 30 June 2021.
several
significant
FINEOS has continued to grow and has
achieved
strategic
milestones to solidify and accelerate our
future growth, despite the challenging
market conditions due
the global
pandemic.
to
Our people continue to be our greatest strength and
we have an enviable client base who continue to invest
in the FINEOS Platform, as well as strongly advocating
for FINEOS in the marketplace. Also, earlier this year,
FINEOS was pleased to be admitted to the S&P/ASX-300,
a significant achievement given this was our first full
fiscal year as a publicly listed company.
Focus and Performance
Total revenue for this fiscal year was €108.3 million,
representing a 23.3% increase on our prior year’s
performance. Importantly, our higher margin subscription
revenue increased to €40.1 million, up 48.6% compared
to the prior year. Within this, organic growth was a strong
32.4%, with the balance from the two acquisitions we
made during the year (Limelight Health Inc. (‘Limelight’)
and DigIn Technologies LLC (‘Spraoi’)). This exceeded our
expectations and is a great accomplishment, particularly
as increasing our subscription revenues is our primary
focus as we grow FINEOS into the global market leading
Software-as-a-Service platform for life, accident and
health insurance, and includes commendable growth in
our products for employee benefits providers.
This year’s revenue growth was attributable to successful
client implementations, cloud upgrades and add-on
cross sales. As our clients continue to transform their
businesses, we believe they will continue to invest in
extending their use of the FINEOS Platform to modernise
and enhance their customer service, grow their business
operations and to replace outdated unsustainable legacy
systems. We also benefitted from new client wins as well
as revenue contributions from our strategic acquisitions.
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FINEOS Corporation Holdings plc
Our EBITDA (defined as earnings before interest, taxes,
depreciation and amortisation) for the fiscal year was
€5.2 million, down from €13.3 million in the previous
year, reflecting some one-off acquisition transaction
costs and losses absorbed following the acquisition
of Limelight in the first quarter. In addition, we were
negatively impacted by losses incurred from foreign
exchange movements.
Through organic growth and our two new acquisitions,
our people headcount (including contractors) has grown
from 875 on 30 June 2020 to 1,065 on 30 June 2021.
In line with our growth strategy, we have continued to
invest in product research and development, sales and
marketing, and cloud operations support.
The total research and development investment for the
fiscal year was €41.3 million, up 45.0% from €28.4 million
in the previous year, reflecting increased client demand
as well as the additional development activity carried
out by Limelight. As mentioned earlier, we are seeing
our investment translate into subscription revenue
growth, as reflected in the 48.6% year on year increase in
subscription revenue and we anticipate continuing this
important investment into our next fiscal year.
Our balance sheet remains debt free, with a cash balance
of €14.0 million at the end of the fiscal year reflecting a
slightly lower balance than originally anticipated due to
a client contract approval which came in late, with the
knock-on impact of an increase in our debtors at year
end. The outcome and performance achieved in the
fiscal year was testament to the strength of our strategy
and our relentless focus on delivering increased value
and enhanced capabilities to our clients, so they provide
the best care and service to their customers.
Insurance carriers in our target market have been
shifting to more than just financial protection and case
management. They are looking for ways to provide
expanded service, which includes voluntary benefits,
absence management and partnering with specialist
service providers to improve the health and wellbeing of
their clients. As the only pureplay end to end insurance
software platform provider focused solely on the group
and individual life, accident and health market, FINEOS
is facilitating the technological and business software
needs of carriers as they deliver this evolving service to
their clients. We partner with them on end-to-end delivery
and the success of this engagement is demonstrated
in the multiple testimonials and references our clients
provide publicly quoting FINEOS, which continues to
build our proven reputation in the market.
Our clear focus and alignment at FINEOS puts us in a
unique position with the FINEOS Platform becoming
the number one player for group employee benefits
in the North America market, measured by revenue,
by number of clients and by the end-to-end quote-
to-claim product that we provide. Specifically in the
North American market, where 73% of our revenue is
now sourced, we more than doubled our subscription
revenue during the fiscal year. This revenue growth
follows two previous years of more than tripling our
subscription revenue in North America each year and
reflects our strong execution of the strategy we set out
when listing on the ASX in August 2019.
In May this year, we hosted the FINEOS Virtual Exchange
where we showcased the FINEOS Platform and the end-
to-end quote-to-claim FINEOS AdminSuite. The event
also explained the strategic benefits of cloud Software-
as-a-Service and helped our clients, both current and
prospective, understand the potential it offers to realise
measurable business benefits of technology innovation
that we are bringing via the FINEOS Platform offering.
Acquisitions
During the fiscal year we completed two acquisitions
to accelerate and enhance our FINEOS Platform and
achieve greater market leadership in the US employee
benefits market and the global life, accident and health
industry.
In August 2020, we completed the acquisition of Limelight
for a net cash outflow of US$74.9 million and raised the
equity to fund the transaction. This acquisition delivered
a key component to the FINEOS Platform, enabling us
to provide new business and underwriting, and allowing
our product offering to expand to the full quote-to-claim
that it is today.
More recently in May of this year we completed the
acquisition of Spraoi. This acquisition, also in the US,
is smaller but also very strategic and was funded from
existing cash reserves. It enhances the FINEOS Platform
by bringing the benefits of additional machine learning
capabilities to the FINEOS Insight and Engage modules.
We are thrilled to welcome both teams to FINEOS and
we are excited about the prospects and opportunities
that these acquisitions bring to the Company.
People
One of our principal objectives is to drive organisational
health to create a great place to work and a competitive
advantage. Our health and wellbeing program at FINEOS
supports all employees by creating an environment
where our people are encouraged to bring their best
selves to work and are supported in achieving greater
wellbeing by fuelling themselves across three core
dimensions: mental, physical and emotional. It is vital to
prioritise our health and wellbeing to sustain ourselves
and inspire others to do the same, especially during the
past year with most of our people working remotely for
the entire year.
FINEOS also recognises the value of inspiring innovation
in our people and maintains a global culture of innovation
and collaboration. Employee culture and engagement
strategies are in place and are measured and reflected
in the Company’s ability to attract and retain talent. We
have a long history of contributing to society and the
environment by supporting pro-bono, philanthropic and
charitable activities in the places where we work and live.
At FINEOS we remain committed to creating a world-
class corporate social responsibility (CSR) program that
truly reinforces and brings to life the FINEOS company
vision of ‘a world where protection from illness, injury
and loss is accessible to everyone’. Our CSR strategy
also supports our purpose of helping our clients care for
the people they serve through the delivery of superior
insurance technology.
We would like to thank our people, our leadership team
and our FINEOS Board of Directors for their excellent
contributions and continued commitment to the FINEOS
cause. We also want to acknowledge and thank our clients
and you, our valued security holders, for your support, as
we continue our mission to become a global market leader
of core systems for group and individual life, accident and
health insurers.
Your sincerely,
Anne O’Driscoll
Chairman
Michael Kelly
Founder and CEO
Annual Report 2021
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Anne O’Driscoll
Chairman
Non-executive Director
Michael Kelly
Executive Director
Chief Executive Officer
Gilles Biscay
Non-executive Director
Based in Sydney, Anne joined the Board in 2019. Anne has over 35 years of business
experience across a broad spectrum of the insurance industry. Anne is currently on
the boards of ASX-listed companies, Steadfast Group Limited and Infomedia Limited,
as well as non-listed companies, MDA National Pty Limited and Commonwealth
Insurance Limited. Anne chairs the audit committee for each of these boards.
Anne has held various other senior management roles within organisations such
as Insurance Australia Group Limited and NRMA Group, as well as being the CFO of
Genworth Australia between 2009 and 2012. She is also a former director of the NSW
Self-Insurance Corporation and Australasian Investor Relations Association Limited.
Anne qualified as a chartered accountant in Ireland with Haughey Boland (now Deloitte)
before joining Coopers & Lybrand (now PwC) in London. Anne moved to Sydney in
1988 and is a graduate of the Australian Institute of Company Directors and a Fellow
of the Australian and New Zealand Institute of Insurance and Finance, Chartered
Accountants Ireland and Chartered Accountants Australia and New Zealand.
Based in Dublin, Michael is the Chief Executive Officer and founder of FINEOS.
Michael has more than two decades of senior management experience in the
insurance industry.
Michael began his career with Paxus Corporation, an Australian insurance software
vendor entering the European market. Michael assisted in establishing Paxus’s LIFE400
product as the market leading policy administration system in continental Europe,
which was later acquired by CSC.
Michael is a previous winner of the EY Ireland Technology Entrepreneur of the Year,
and in 2015 was named as one of the top 10 most influential executives in the Irish
international FinTech sector.
Michael attended Dublin City University where he graduated with a BSc in
Computer Science.
Based in Paris, Gilles joined the Board in 2019, having previously served on the Board
of FINEOS Corporation Limited, the main operating entity of the FINEOS Group from
2014. Gilles spent most of his career at Accenture, where he worked in multiple areas
ranging from large system integration, post-merger implementations, case tools and
enterprise resource planning software development.
In 2005, Gilles was named as the managing director and global lead for Accenture
portfolio in insurance systems. Under his leadership, Accenture’s vertical software
activities grew significantly both organically and with new clients in countries such as
Japan and Turkey, and externally with acquisitions such as NaviSys and Duck Creek,
both insurance software providers.
Gilles is also a founding partner and president of FutureWork SAS, a strategy
consulting firm aimed at helping corporations manage digital transformations, and
a non-executive independent director and board member of EUDONET SAS, a cloud-
based CRM provider.
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FINEOS Corporation Holdings plc
Board of Directors Based in Sydney, Martin joined the Board in 2019. Martin is the Chief Executive Officer
(CEO) of the Association of Superannuation Funds of Australia (ASFA), the peak policy,
research and advocacy body for Australia’s superannuation industry. Prior to this
Martin was a senior partner in the management consulting practice of KPMG, where
he led the firm’s Global Business Services and Business Process Outsourcing activities.
From 2007 to 2011, Martin was CEO at the Financial Services Institute of Australasia
(FINSIA) where he led the organisation’s transformation post the sale of its education
business. Prior to FINSIA, he led strategy and development for the Chartered Institute
of Management Accountants (CIMA) in Asia Pacific.
Martin holds a Ph.D. from University College Cork, is a former Senior Fulbright Scholar
and has extensive research and policy experience from his time as an academic in
Ireland, France and the United States. Martin is a member of Chartered Accountants
Australia and New Zealand.
Based in the US, David joined the Board on 14 October 2019. David has over 35 years of
experience in the insurance, technology and professional services industries.
David most recently served as Global Insurance Leader for Ernst & Young LLP (EY),
a professional services operation across 150 countries with US$31bn+ in revenues.
David currently sits on the Board of Directors at Westfield Insurance and Distinguished
Programs, both in the United States. Previously David served as the CEO of UNIRISX, a
SaaS-based policy administration insurtech solution based in the UK.
David began his career with Accenture (NYSE: ACN), where he served in a variety of
leadership and client service roles including CEO of Accenture’s Financial Services
Solutions Group. He led the creation of a 200-person global insurance software
company within Accenture, driving more than US$1bn in consulting and outsourcing
pull through revenues, in addition to leading the acquisition and integration of a major
life and annuity software provider.
Based in Dublin, Tom joined FINEOS in 2003 as Chief Financial Officer and was
appointed to the Board in 2019. Tom has over 30 years of industry experience having
worked in financial management with a number of global corporations across the IT,
financial services, distribution and manufacturing industries.
Prior to joining FINEOS, Tom spent seven years at Oracle where he held various
positions including as a Board Member and Finance Director of Oracle Ireland and
Finance Director for Oracle EMEA Ltd. Tom also gained expertise working across a
number of financial and accounting roles at MFS Communications Ltd, Unisys World
Trade Incorporated and Black & Decker Inc.
Tom is a Fellow of the Chartered Institute of Management Accountants and a Chartered
Global Management Accountant in Ireland.
Dr Martin Fahy
Non-executive Director
David Hollander
Non-executive Director
Tom Wall
Executive Director
Chief Financial Officer
Annual Report 2021
5
The Directors present herewith their report and audited consolidated financial statements for the year ended 30 June
2021. These financial statements reflect the performance of FINEOS Corporation Holdings plc and its subsidiaries
(‘the Group’) for the fiscal year ended 30 June 2021.
1.
Directors and Secretary
The Directors of the Company during, or since the end of, the year are as follows. Directors were in office for the
whole of the year unless otherwise stated.
Chairman
Anne O'Driscoll
Chief Executive Officer
Michael Kelly
Other Directors
Gilles Biscay
Martin Fahy
David Hollander
Peter Le Beau
Tom Wall
Date of appointment
25 July 2019
12 December 2018
25 June 2019
25 July 2019
15 October 2019
Retired 4 November 2020
25 June 2019
Tom Wall and Vanessa Chidrawi served as Joint Company Secretary for the year.
Particulars of the Directors’ qualifications and experience as well as their directorships of other listed companies are
set out under Board of Directors on pages 4 to 5.
2.
Directors’ Meetings
The number of meetings of the Company’s Board of Directors (the ‘Board’) and of each Board Committee held during
the year ended 30 June 2021, and the number of meetings attended by each Director, were as follows:
Board
Audit and Risk
Management Committee
Remuneration and
Nomination Committee
A
6
6
6
6
6
2
6
B
6
6
6
6
6
2
6
A
4
–
4
4
–
1
–
B
4
–
4
4
–
1
–
A
4
–
4
4
4
1
–
B
4
–
4
4
4
0
–
Anne O’Driscoll
Michael Kelly
Gilles Biscay
Martin Fahy
David Hollander
Peter Le Beau (i)
Tom Wall
A: Meetings eligible to attend
B: Meetings attended as a member
(i) Retired 4 November 2020
Particular details of the responsibilities of the members of the Board and the various Committees are set out in the
Corporate Governance Statement (see section 11 of the Directors’ Report).
3.
Audit Committee
The Audit and Risk Management Committee assists the Board in carrying out its accounting, auditing and financial
reporting responsibilities, including those outlined in Section 167 of the Companies Act 2014.
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FINEOS Corporation Holdings plc
Directors’ Reportfor the year ended 30 June 2021 4.
Principal Activities and Review of the Development
and Performance of the Business During the
Financial Year
The principal activity of the Group is the development and sale of software. FINEOS is a global software group
providing modern customer-centric core software to Life, Accident and Health insurers and Employee Benefits
providers.
The Group helps its customers move on from outdated legacy administration systems to the FINEOS modern
purpose-built, customer-centric core product-suite, FINEOS AdminSuite for New Business, Billing, Claims, Absence
and Policy Administration, enabling improved operational efficiency, increased effectiveness and excellent customer
care. The Group is developing, both organically and through acquisitions, its FINEOS Insights offerings.
FINEOS AdminSuite is designed to manage the modern complex structures and relationships of group and individual
insurance processing to optimise plan, coverage and data management, operational processing, and business
intelligence.
Business summary and key performance indicators
The key performance indicators of the financial results are as follows:
• An increase in revenue from €87.8 million for the year ended 30 June 2020 to €108.3 million for the year ended
30 June 2021 which is a 23.3% improvement.
• Employee retention rates continued at over 90%.
• The loss before tax for the year ended 30 June 2021 is €13.5 million compared to a profit before tax of
€0.7 million for the year ended 30 June 2020.
• Basic loss per share of €4.15 cents for the year ended 30 June 2021 compared to a basic loss per share of
€0.11 cents for the year ended 30 June 2020.
Achieving revenue growth of 23.3% compared with the prior comparative year demonstrates the resilience of the
business whilst several clients and potential clients faced reduced funding for systems investment in the context of
the social and economic challenges generated by COVID-19.
During calendar year 2020, FINEOS completed eight new implementations and seven major upgrades of the FINEOS
Platform, with most of these in the latter half of the year. FINEOS has billed for each of these implementations or
upgades by 30 June 2021. Many of the Group’s clients (primarily in the USA, Canada, Australia and New Zealand) are
actively engaged in brand-new implementations, version upgrades and platform migrations to the cloud.
Anticipating clients’ need to undertake digital transformation drove the Group’s significant R&D investment over the
past five years. The value of that investment is now being realised with increasing billings on the cloud platforms.
The consolidated financial statements are presented in Euro which is the functional currency of the Group. Euro
based currency volatility continued during fiscal year 2021 in relation to the US Dollar, British Pound, Australian
Dollar, New Zealand Dollar, Polish Zloty and Canadian Dollar, resulting in a foreign exchange loss of €0.3m million
for the Group in the year (2020: foreign exchange gain of €0.8m million). Foreign exchange continues to be a risk
for FINEOS given the export profile of the Group. This is closely managed with part of the risk being covered by the
natural hedge of the non-Euro denominated staff costs and other overheads being paid in local currency.
Travel restrictions and localised lock-downs due to COVID-19 are reflected in a continued low level of travel,
accommodation and events expense in the period relative to the same period last year.
The consolidated statement of comprehensive income for the year ended 30 June 2021 and the consolidated
statement of financial position at that date are set out on pages 28 and 29. The consolidated loss on ordinary
activities for the year, before tax, amounted to €13.5 million compared to a profit before tax of €0.7 million in
2020. After adding back a taxation credit of €1.0 million (2020: deducting a tax expense of €0.9 million), a loss of
€12.5 million has been debited to reserves (2020: loss of €0.2 million debited to reserves).
Annual Report 2021
7
4.
Principal Activities and Review of the Development
and Performance of the Business During the
Financial Year (continued)
Non-financial key performance indicators include employment and environmental matters. The Company and Group
will seek to minimise adverse impacts on the environment from its activities, whilst continuing to address health,
safety and economic issues. The Group adheres to best practice employee welfare and complies in all material
respects with health and safety requirements.
The Group’s direct environmental carbon footprint is modest as a service-based operation and particularly with
travel restrictions as a result of the COVID-19 pandemic. During FY22, the Group intends to measure its carbon
footprint and look at measures to reduce its net emissions.
5.
Changes in the State of Affairs
The cash reserves closed at €14.0 million at 30 June 2021 compared to €39.8 million as at 30 June 2020. The Group
had no external debt as at 30 June 2021.
On 14 August 2020, FINEOS acquired Limelight, a leading US-based provider of end-to-end quoting, rating and
underwriting Software-as-a-Service (’SaaS’) that streamlines critical front office workflows for life, accident and health
insurance carriers. The net cash outflow for the acquisition of US$66.6 million (€56.4 million) together with the issue
of equity instruments in the amount of US$8.3 million (€7.0 million) equates to US$74.9 million (€63.4 million).
FINEOS undertook an equity raising on 11 August 2020 to provide funding towards the acquisition. FINEOS successfully
completed a fully underwritten institutional placement, raising approximately AU$85 million through the issue of
19,953,052 new fully paid CHESS Depositary Interests over FCL shares (‘CDIs’). The placement was undertaken at an
offer price of AU$4.26 per new CDI.
FINEOS also undertook a non-underwritten Security Purchase Plan (‘SPP’) raising approximately AU$8 million
through the issue of 1,877,520 new fully paid CDIs, at an offer price of AU$4.26 per new CDI, which completed on 14
September 2020.
On 11 May 2021, FINEOS acquired Spraoi, a leading provider of machine learning capabilities for the Employee
Benefits and Life industry. The net cash outflow for the acquisition to date of US$3.6 million (€3.0 million) together
with the fair value of earnout consideration in the amount of US$5.4 million (€4.4 million) and an additional payment
owed on final true-up of US$0.2 million (€0.1 million) equates to US$9.2 million (€7.5 million).
Costs of the capital raise and fees and expenses related to the Limelight acquisition amounted to €2.7 million. A
further €0.4 million of acquisition costs was incurred in relation to the acquisition of Spraoi.
The decrease in cash in the period also includes increased spend on R&D to support both implementations and
ongoing product development.
Equity increased by €53.1 million to €136.3 million from €83.2 million during the year. The net proceeds from the
new share capital were offset by the loss for the year of €13.5 million and a charge of less than €0.1 million against
the foreign exchange reserve.
Apart from the decrease in cash reserves noted above, other key movements in assets contributing to a growth in
total assets of €60.1 million to €184.5 million were:
• €70.7 million of intangible assets relating to current year acquisitions (see Note 11 for components)
• €25.0 million of internal development expenditure
• €1.5 million additions to right-of-use software
• €16.0 million combined amortisation charge
• An increase of €5.7 million in trade and other receivables driven by the increase in revenue and lower cash
receipts from customers in quarter 4 of FY21.
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FINEOS Corporation Holdings plc
Directors’ Report (continued)for the year ended 30 June 2021 5.
Changes in the State of Affairs (continued)
Total liabilities increased by €6.9 million to €48.1 million from €41.2 million during the year with the significant
movements being:
• Addition of a liability for contingent acquisition consideration of €4.6 million
• An increase of €2.8 million in deferred revenue due primarily to the increase in subscription revenue.
6.
Likely Developments and Outlook
The Group’s growth strategy is unchanged as it continues to see ongoing double digit growth opportunities. The
focus is on both increasing market share in the Group’s chosen segments – life accident and health insurers and
employee benefits providers – by winning new clients and driving up-sell and cross-sell revenues from existing
clients.
The Group will continue to invest in the FINEOS Platform, both building ongoing enhancements to core products and
expanding the offering within FINEOS Insight.
The Group has continued to deliver sales and implementations during the COVID-19 pandemic with no major delays
or interruptions. This was achieved with the vast majority of employees working remotely since March 2020. The
combination of increased (i) acceptance of remote working by employees and clients; (ii) COVID-19 vaccinations
and related easing in travel restrictions; and (iii) market reliance on digital experience, are positives for the Group’s
outlook. However, there is continued uncertainty on the pace and timing of economic recovery and the budgets
available within clients for investment in new systems and upgrades. The Group’s outlook for FY22 is subject to this
uncertainty along with the other risks and uncertainties set out in section 9 below.
7.
Dividends
During the year the Company made no dividend payments to Ordinary shareholders. The Directors do not propose
the payment of a final dividend for the year.
8.
Political Donations
There were no political donations made during the year ended 30 June 2021.
9.
Principal Risks and Uncertainties Faced
In the opinion of the Directors, the main risks and uncertainties faced by the Group, along with the nature of their
potential impact, are as follows:
• global economic and political uncertainty and volatility continues in all marketplaces where FINEOS trades (see
section 6 above on COVID-19). This could potentially lead to delays and uncertainty on the allocated budgets of
existing and prospective customers. It has directly contributed to extended procurement timelines, extended
contract negotiation timelines, and adds additional focus on return on investment and specific payback
timelines on these investments;
• FINEOS continues to face competition in its respective markets, and if FINEOS fails to compete successfully,
market share will decline;
• FINEOS subsidiaries and branches operate in currencies other than the Euro, and continued volatility in foreign
exchange rates relative to the Euro could adversely affect the Group’s reported earnings and cash flow;
• competitors’ products may replace existing FINEOS products and as a result, FINEOS may lose market share in
the markets for these products;
• major changes in technology could have an impact on FINEOS and its trading model unless it continues to
invest in research and development and remains competitive and current;
Annual Report 2021
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9.
Principal Risks and Uncertainties Faced (continued)
• FINEOS sells product and services in the USA, Canada, Australia, New Zealand, the UK and Europe, which
increases the complexity of local customer requirements, including addressing local compliance requirements
in the respective countries;
•
the loss of the chief executive officer or other key employees, or the limited availability of qualified personnel,
may disrupt operations or increase the cost structure; and
•
the loss of a significant customer could have a significant negative effect on revenues and profits.
The impact of the above is difficult or impossible to predict accurately and many of the risks and uncertainties faced
are beyond the Group’s control.
In the normal course of business, the Group is also exposed to price risk, credit risk and liquidity risk, which are
discussed in more detail in Note 24.
10.
Events Subsequent to the Year End
There are no events subsequent to the year end that would require disclosure in or adjustment to the consolidated
financial statements.
11. Corporate Governance Statement
The corporate governance statement of FINEOS Corporation Holdings Plc, as approved by the Board, can be found
on the Company’s website at https://www.fineos.com/investors/corporate-governance/.
12.
Transactions with Directors
There were no contracts of any significance in relation to the business of the Group in which the Directors had any
interest, as defined by the Companies Act 2014, at any time during the year ended 30 June 2021, other than as
disclosed in Note 26.
13. Controlling Party
Michael Kelly is the ultimate controlling party of the FINEOS Group.
14. Directors’ and Secretary’s Interests
The Directors’ and Company Secretary’s interests in shares and share options as at 30 June 2021 are set out on page
18 in the Remuneration and Nomination Committee report.
15. Group Companies
Particulars of the companies within the Group required to be disclosed under Section 314(1) of the Companies Act
2014 in respect of Group companies are detailed in Note 28.
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FINEOS Corporation Holdings plc
Directors’ Report (continued)for the year ended 30 June 2021 16. Directors’ Compliance Statement
The Directors have considered the requirements of the Group to prepare a Directors’ Compliance Statement in
accordance with Section 225 of the Companies Act 2014. It was noted that FINEOS Corporation Holdings plc, as a
single entity, does not meet the requirement threshold and accordingly no Statement of Compliance is presented.
However, certain individual subsidiaries do meet the thresholds required and Statements of Compliance relevant to
those entities will be disclosed in their respective financial statements in accordance with legislation.
17. Accounting Records
The Directors are responsible for ensuring that proper books and accounting records, as outlined in Sections
281 to 285 of the Companies Act 2014, are kept by the Company. To achieve this, the Directors have appointed a
professionally qualified financial director who reports to the Board and ensures that the requirements of Sections
281 to 285 of the Companies Act 2014 are complied with. These books and accounting records are maintained at the
Company’s registered office at FINEOS House, East Point Business Park, Dublin 3.
18.
Statement on Relevant Audit Information
In the case of all persons who are Directors at the time this report is approved in accordance with Section 332 of the
Companies Act 2014:
(a) so far as the Directors are aware, there is no relevant audit information of which the Company’s statutory
auditors are unaware; and
(b) the Directors have taken all steps that they ought to have taken as Directors to make themselves aware of
any relevant audit information, and to establish that the Company’s statutory auditors are aware of that
information.
19. Auditors
Mazars, Chartered Accountants and Statutory Audit Firm, express their willingness to continue in office in accordance
with Section 383(2) of the Companies Act 2014.
20.
Takeover Provisions
FINEOS is not subject to Chapters 6, 6A, 6B and 6C of the Companies Act 2014 dealing with the acquisition of its
shares (including substantial holdings and takeovers).
FINEOS has incorporated into its Articles shareholder protection provisions that are similar to the provisions of the
Australian Corporations Act 2001. These provisions seek to protect the interests of shareholders where a person
seeks to acquire a substantial interest in, or control of, FINEOS. The Articles prohibit a person from acquiring a
relevant interest in issued voting shares in FINEOS if any person’s voting power will increase from 20% or below
to more than 20%, or from a starting point that is above 20% and below 90%. Exceptions to the prohibition apply
(e.g. acquisitions with shareholder approval, 3% creep over six months and rights issues that satisfy prescribed
conditions). Compulsory acquisitions are permitted by persons who hold 90% or more of securities or voting rights
in a company.
Annual Report 2021
11
21.
Restrictions on the Transfer of Securities under the
Companies Act
The Company is an Irish company formed under the laws of Ireland and therefore subject to the provisions of the
(Uncertificated Securities) Regulations, 1996 (S.I No 68 of 1996) (‘1996 Regulations’) and its Articles of Association
accordingly contains prohibitions on transfers. The provision of uncertificated securities is regulated by the 1996
Regulations, which is administered by the Office of the Director of Corporate Enforcement and the Companies
Registration Office. The Company must comply with the provisions of the 1996 Regulations. The Company may
therefore refuse to register transfers, pursuant to a direction from the Irish High Court, where the transfer is
prohibited under another enactment, where the Company has noted the transfer is to a deceased person, or where
the instruction requires a transfer of units to an entity which is not a legal person, a minor, or to be held jointly in
the names of more persons than permitted under the terms of issue of the security. Refer to Articles 36.2 and 36.3
of the Company’s Articles of Association.
On behalf of the Board
Michael Kelly
Director
Tom Wall
Director
25 August 2021
12
FINEOS Corporation Holdings plc
Directors’ Report (continued)for the year ended 30 June 2021
As chair of the Remuneration and Nomination Committee (the Committee), I am pleased to present the report for
the Committee for the year ended 30 June 2021.
The objective of this report is to provide shareholders with information to enable them to understand the remuneration
structures in place and how they relate to the Group’s financial performance. The report also provides a summary of
the Committee’s roles and responsibilities and how these were discharged in the year ended 30 June 2021.
Membership and Meetings of the Committee
The members of the Committee during the year ended 30 June 2021 are set out in the table below. The members of
the Committee were in place for the whole of the year unless otherwise stated.
All members of the Committee are independent Non-executive Directors.
Committee Member
Ms Anne O’Driscoll
Mr Gilles Biscay
Dr Martin Fahy
Mr David Hollander
Mr Peter Le Beau
Position
Appointed
Chair
Member
Member
Member
Member
25 July 2019
25 June 2019
25 July 2019
15 October 2019
Retired
4 November 2020
Attendance details for the three meetings held during the year are outlined on page 6 in the Annual Report. The
Committee members’ biographies are set out on pages 4 to 5.
Role of the Remuneration and Nomination Committee
The purpose of the Committee is to assist the Board by reviewing and making recommendations to the Board in
relation to:
•
the Group’s remuneration policy, including as it applies to Directors, and the process by which any pool of
Directors’ fees approved by shareholders is allocated to Directors;
•
remuneration packages of Executive Directors, Non-executive Directors and senior executives;
• equity-based incentive plans and other employee benefit programs;
•
•
the Group’s pension/superannuation arrangements;
those aspects of the Group’s remuneration policies and packages, including equity-based incentives, which
should be subject to shareholder approval;
• succession plans of the Chief Executive Officer, Executive Directors and senior executives;
• Board succession issues and planning;
•
•
•
•
•
the appointment and re-election of Board and Committee members;
the induction of new Directors and continuing professional development programs for Directors;
the process for recruiting a new Director, including evaluating the balance of skills, knowledge, experience,
independence and diversity on the Board;
the process for the evaluation of the performance of the Board, its Board Committees and individual Directors;
and
the size and composition of the Board and strategies to address Board diversity and the Group’s performance
in respect of the Group’s Diversity Policy, including whether there is any gender or other inappropriate bias in
remuneration for Directors, senior executives or other employees.
The Committee charter can be found at https://www.fineos.com/investors/corporate-governance/.
Annual Report 2021
13
Remuneration and Nomination Committee Reportfor the year ended 30 June 2021 Remuneration Policy
The Group is committed to attracting and retaining the best people to work in the organisation, including Directors
and senior management. Appropriate remuneration designed to reward, retain and motivate people is a key element
in achieving that objective. Part of the Committee’s role is to assist the Board in implementing its Remuneration
Policy. A copy of the policy can be found at https://www.fineos.com/investors/corporate-governance/.
Executive Remuneration Framework
There are two Executive Directors: the Chief Executive, Mr Michael Kelly, and the Chief Financial Officer, Mr Tom Wall.
The elements of the remuneration package which may apply to Executive Directors are base salary, pension
contributions, other benefits and both short-term and long-term incentives.
The tables below summarise the framework which was applied during the year ended 30 June 2021. A similar structure
will apply during the year ended 30 June 2022. The relevant benefits are included in the Directors’ remuneration
table shown below.
Benefit
Nature of Benefit
Annual base salary
Salary levels are reviewed annually by reference to market comparisons and reflect
the individual’s level of expertise and contribution to the organisation, in conjunction
with other benefits being provided. Salary increases are normally in line with the wider
workforce.
Pension contributions
Participation in a defined contribution scheme available to employees in the same
geography. There is a Company contribution of 10% of base salary for the CFO.
The CEO does not utilise this benefit.
Other benefits
Benefits currently provided are healthcare cover, life insurance and permanent health
insurance cover. Premiums payable are included in the remuneration disclosed in this
report.
14
FINEOS Corporation Holdings plc
Remuneration and Nomination Committee Report (continued)for the year ended 30 June 2021 Incentive
Basis of Incentive
Maximum Opportunity
Achieved for FY2021
Short-Term Incentives (Bonus
and Commissions paid
in
cash)
is entitled to
The CEO
additional
an
receive
bonus
cash
annual
recognition of his
in
contribution towards new
client acquisitions.
CEO: Mr Kelly
leads a
number of key customer
relationships and, as such,
participates in the FINEOS
sales commission plan.
CEO: Bonus of 15% of
salary.
is entitled to
The CFO
receive an annual bonus
based on achievement
of agreed Company and
performance
individual
targets.
CFO: 15% of base salary if
all objectives achieved and
up to 25% where there is
over-achievement beyond
such agreed targets.
CFO: Bonus of 20% of
salary
Long-term incentives (Equity-
based remuneration)
No more than 5% of the
issued share capital of the
Company may be issued
or reserved under The
Plan at any time.
Equity
long-term
A
incentive
plan was established on
admission to the ASX (‘the
2019
Incentive
Plan’) (The Plan). Awards
from this scheme may
be made in the form of
options, restricted shares,
restricted stock units and
performance shares. See
Note 19 for more details.
The terms and conditions
of any awards made
to Executive Directors
under the 2019 Equity
Incentive Plan,
including
those relating to targets,
vesting and/or exercise
(as the case may be),
are determined by the
Committee and
the
extent required, subject to
CDI holder approval.
to
There were no awards to
the CEO under The Plan
during FY21.
CFO
The
received
an award of 150,000
options over CDIs during
FY21 under The Plan
following
at
the 2020 Annual General
Meeting. The options are
exercisable at AU$4.2688
and expire on 6 November
2027.
approval
The Committee reviews the performance of the Executive Directors for the purposes of determining short-term
incentives and makes recommendations to the Board as to the pay-out level. The short-term incentives are payable
in cash following approval of the annual audited accounts.
Annual Report 2021
15
Non-executive Directors
The Board aims to recruit high-calibre Non-executive Directors, with broad commercial, international or other
relevant experience.
Non-executive Director remuneration is reviewed by the Board based on recommendations from the Committee.
The aggregate amount paid to all Non-executive Directors in any financial year for their services must not exceed the
amount fixed by the securityholders in general meeting. This amount is currently fixed at AU$800,000 (€500,375i)
per annum.
There was no change to annual fees for Non-executive Directors during the year. As Chair of the Board, I am paid
a fee of AU$160,000 (€100,075) per annum. David Hollander is paid a fee of US$170,000 (€142,522) per annum for
acting as Non-executive Director. Until October 2020, he also had the capacity to invoice the Company separately for
the provision of consultancy services to the Board but did not receive any such fees during the year to 30 June 2021.
The other Non-executive Directors, Gilles Biscay, Martin Fahy and Peter Le Beau, are paid fees of €52,167, AU$90,000
(€56,292) and €52,167 per annum, respectively. These Non-executive Director fees include fees payable to each Non-
executive Director for his/her role on the relevant Board committees.
The amounts set out above are exclusive of pension/superannuation contributions where required by law to be made
by FINEOS but such contributions are included in the remuneration set out in the Table of Directors’ Remuneration
for the year ended 30 June 2021 below.
Under their letters of appointment, the Non-executive Directors are not entitled to participate in any share, bonus,
retirement benefit or other scheme operated by the Company or any Group Company.
In addition, all reasonable and documented expenses incurred in the performance of the Non-executive Directors’
duties are reimbursed.
Service Contracts/Letters of Appointment
Details of service contracts for the Executive Directors are outlined below.
Name
Michael Kelly
Title
Date of Contract
Notice Period by
Company or Director
Chief Executive Officer
and Founder
12 December 2018
12 months
Tom Wall
Chief Financial Officer
25 June 2019
6 months
Each of the Non-executive Directors has received an appointment letter from FINEOS, confirming their respective
roles and responsibilities as Directors, and FINEOS’ expectations of them as Non-executive Directors.
The appointment letter includes membership of any Board Committees, the fees to be paid and the time commitment
expected. The letter also covers matters such as confidentiality, data protection and securities dealing policy. In
addition, Non-executive Directors are expected to acquire a beneficial interest in CDIs equivalent to their annual fees
within 36 months of the Company’s IPO (which occurred in August 2019).
Dates of appointment for the Non-executive Directors are set out below:
Name
Anne O’Driscoll
Gilles Biscay
Martin Fahy
David Hollander
Peter Le Beau
Date of Appointment
25 July 2019
25 June 2019
25 July 2019
15 October 2019
Retired 4 November 2020
i Throughout this Committee report, amounts denominated in Australian or US dollars are translated into Euro at a rate of AU$/EUR
1.5988 and US$/EUR 1.1928, being the average rates for the year to 30 June 2021.
16
FINEOS Corporation Holdings plc
Remuneration and Nomination Committee Report (continued)for the year ended 30 June 2021 Annual Report on Remuneration 2021
The following table sets out the total remuneration for Directors for the year ended 30 June 2021.
Salary/fees
€
Short-term
incentives
€
Post-
employment
benefits
€
Other
benefits
€
Shares
allotted
€
Director
Executive Directors
Michael Kelly
Tom Wall
380,592
277,418
57,089
55,484
–
3,265
27,742
12,904
Non-executive Directors
Anne O’Driscoll
100,000
Gilles Biscay
Martin Fahy
55,000
56,250
David Hollander
148,106
Peter Le Beau
22,917
–
–
–
–
–
9,507
–
5,348
–
–
–
–
–
–
–
Total
1,040,283
112,573
42,597
16,169
Share
awards
gain on
exercise(a)
€
LTIP
€
Total
2021
€
–
–
440,946
3,319,860
25,752 3,719,160
–
–
–
–
–
–
–
–
–
–
109,507
55,000
61,598
148,106
22,917
3,319,860
25,752 4,557,234
–
–
–
–
–
–
–
–
(a) On 8 October 2020, Tom Wall exercised 1,300,000 options at €0.135 each and resultant CDIs were sold at
AU$4.50 per security resulting in a net gain of €3,319,860.
The equivalent table of total remuneration for Directors for the year ending 30 June 2020 is as follows:
Salary/fees
€
Short-term
incentives
€
Post-
employment
benefits
€
Other
benefits
€
Shares
allotted(a)
€
Share
awards
gain on
exercise(b)
€
LTIP
€
Total
2020
€
Director
Executive Directors
Michael Kelly
380,592
120,000
-
3,125
Tom Wall
277,418
67,500
27,742
11,487
-
-
-
921,117
-
503,717
- 1,305,264
Non-executive Directors
Anne O’Driscoll
Gilles Biscay
Martin Fahy
93,590
52,167
52,644
David Hollander
115,908
Peter Le Beau
52,167
-
-
-
-
-
8,618
-
4,847
-
-
-
-
-
-
-
12,255
-
12,255
-
-
-
-
-
-
-
-
-
-
-
-
114,463
52,167
69,746
115,908
52,167
Total
1,024,486
187,500
41,207
14,612
24,510
921,117
- 2,213,432
(a) 8,000 CDIs were allotted to each of Anne O’Driscoll and Martin Fahy for their services in relation to pre-IPO work
(see Note 17 for further detail).
(b) The market price of the CDIs at the date of exercise of Tom Wall’s share options during the prior year was
AU$3.65. 200,000 options were exercised at €0.135 and 275,640 options were exercised at €0.249.
Annual Report 2021
17
Directors’ and Company Secretary’s Interests in Company Shares
Total CDIs
held at
1 July 2020
68,000
166,418,040
29,400
–
8,000
–
–
–
Purchases/
Increase
in indirect
holdings
Acquired on
exercise of
options
Sales/
Reductions
2,399
–
6,483
2,500
–
41,224
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,300,000
(1,300,000)
Total
shares/
CDIs held
at 30 June
2021(a)
CDIs held
nominally
at 30 June
2021(b)
70,399
10,399
166,418,040
–
35,883
35,883
2,500
8,000
41,224
–
–
2,500
8,000
–
–
–
Anne O’Driscoll
Michael Kelly
Gilles Biscay
Vanessa Chidrawi
Martin Fahy
David Hollander
Peter Le Beau(c)
Tom Wall
(a) Total CDIs at 30 June 2021 represent CDIs held directly by the Director and indirectly by relevant Director’s
related parties inclusive of domestic partners, dependents and entities jointly controlled or significantly
influenced by the Director. They also represent the relevant interest in the Company’s listed securities as
notified by the Directors to the ASX in accordance with the ASX Listing Rules.
(b) Shares/CDIs held nominally are those CDIs registered in the name of the individual Director.
(c) Peter Le Beau retired as a Director with effect from the close of the AGM on 4 November 2020.
Directors’ Interests in Options
The only options on issue that are held by Directors are as follows:
Options held at
Options
1 July 2020 Options issued
exercised Options lapsed
Options held at
30 June 2021
Tom Wall
2,300,000
150,000
(1,300,000)
–
1,150,000
On 8 October 2020, Tom Wall exercised 1,300,000 options at €0.135 each and resultant CDIs were sold at AU$4.50
per security resulting in a net gain of €3,319,860.
Of the remaining options held by Tom Wall, 1,000,000 options over CDIs are exercisable at €0.135 and expire on
3 February 2026 and 150,000 options over CDIs are exercisable at AU$4.2688 and expire on 6 November 2027.
See Note 19 for further detail on the Company’s equity incentive schemes.
On behalf of the Committee
Anne O’Driscoll
Chair of the Remuneration and Nomination Committee
18
FINEOS Corporation Holdings plc
Remuneration and Nomination Committee Report (continued)for the year ended 30 June 2021
The Directors are responsible for preparing the Annual Report and the Group and Company financial statements in
accordance with applicable law and regulations.
Irish company law requires the Directors to prepare group and company financial statements for each financial year.
Under the law, the Directors have elected to prepare the Group and Company financial statements in accordance
with the Companies Act 2014 and IFRS. Under company law, the Directors must not approve the Group and Company
financial statements unless they are satisfied that they give a true and fair view of the assets, liabilities and financial
position of the Group and Company as at the financial year end date and of the profit or loss of the Group for the
financial year.
In preparing these financial statements, the Directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and accounting estimates that are reasonable and prudent;
• state whether the financial statements have been prepared in accordance with applicable accounting
standards, identify those standards, and note the effect and reasons for any material departure from those
standards; and
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the
Group will continue in business.
The Directors are responsible for ensuring that the Company keeps or causes to be kept adequate accounting
records, which correctly explain and record the transactions of the Company, enable at any time the assets, liabilities,
financial position and profit or loss of the Group and parent Company to be determined with reasonable accuracy,
enable them to ensure that the parent Company and Group financial statements comply with the Companies Act
2014 and enable the financial statements to be audited. They are also responsible for safeguarding the assets of
the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the financial information included on the
Company’s website. Legislation in the Republic of Ireland governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
On behalf of the Board
Michael Kelly
Director
Tom Wall
Director
25 August 2021
Annual Report 2021
19
Directors’ Responsibilities Statement INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
FINEOS CORPORATION HOLDINGS PLC
Opinion
We have audited the financial statements of FINEOS Corporation Holdings Plc (‘the Company’) and
Subsidiaries (‘the Group’) for the year ended 30 June 2021, which comprise the Consolidated Statement
of Comprehensive Income, the Consolidated and Company Statement of Financial Position, the
the Consolidated and Company
Consolidated and Company Statement of Changes in Equity,
Statement of Cash Flows and the notes to the financial statements, including the summary of significant
accounting policies set out in Note 2. The financial reporting framework that has been applied in their
preparation is Irish Law and International Financial Reporting Standards (‘IFRS’) as adopted by the
European Union.
In our opinion the accompanying financial statements:
•
•
•
give a true and fair view of the assets, liabilities and financial position of the Group and the
Company as at 30 June 2021 and of the Group’s loss for the year then ended;
have been properly prepared in accordance with International Financial Reporting Standards as
adopted by the European Union; and
have been properly prepared in accordance with the requirements of the Companies Act 2014.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (Ireland) (ISAs
(Ireland)) and applicable law. Our responsibilities under those standards are further described in the
Auditor's responsibilities for the audit of the financial statements section of our report. We are
independent of the Company in accordance with ethical requirements that are relevant to our audit of
financial statements in Ireland, including the Ethical Standard for Auditors (Ireland) issued by the Irish
Auditing and Accounting Supervisory Authority (IAASA), and we have fulfilled our other ethical
responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the Directors’ use of the going concern
basis of accounting in the preparation of the financial statements is appropriate.
Our evaluation of the Director’s assessment of the entity’s ability to continue to adopt the going concern
basis of accounting included the following:
• We obtained the cash flow forecasts prepared for the Group;
• We tested the clerical accuracy of the cash flow forecasts;
• We considered the consistency of the forecasts in line with other areas of our audit;
• We tested and challenged management on the key assumptions underlying the forecasts;
• We reviewed the supporting documentation for the funding and facility options available to the
Group including the nature of the facilities and their repayment terms; and
• We assessed the adequacy of the disclosures in the financial statements in relation to going
concern.
20
FINEOS Corporation Holdings plc
Independent Auditor’s Report INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
FINEOS CORPORATION HOLDINGS PLC
Based on the work we have performed, we have not identified any material uncertainties relating to
events or conditions that, individually or collectively, may cast significant doubt on the Company’s or
Group’s ability to continue as a going concern for a period of at least twelve months from the date when
the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described
in the relevant sections of this report.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
the audit of the financial statements of the current year and include the most significant assessed risks
of material misstatement (whether or not due to fraud) identified by the auditor, including those which
had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and
directing the efforts of the engagement team. These matters were addressed in the context of our audit
of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a
separate opinion on these matters.
We summarise below the key audit matters in forming our audit opinion above, together with an
overview of the principal audit procedures performed to address each matter and, where relevant, key
observations arising from those procedures.
Key Audit Matter
Revenue recognition
(€108.3 million for the year ended 30 June
2021; 2020: €87.8 million)
The following are key considerations:
• The significance of revenue to understanding
the financial results for users of the financial
statements.
• The extent of deferred revenue held by the
Group and the assessment of its systematic
release in line with relevant
revenue
recognition principles.
• The complexity involved in applying IFRS 15.
• The complexity associated with the varied
nature of bespoke contracts in forming new
commercial arrangements.
How Our Audit Addressed the Key Audit Matter
We performed a number of procedures including the
following:
• developed an understanding of and evaluated the
operating effectiveness of relevant key revenue
internal
revenue
including
calculation and release controls;
controls,
deferred
carried out detailed substantive testing;
• use of IT audit to perform data reconciliations.
•
• on a sample basis, recalculated the deferred and
accrued portions of customer agreements and
compared this to the amount deferred and accrued
on the balance sheet;
• assessed
associated
including
accounts receivable and deferred revenue for
unusual reconciling items;
reconciliations
• assessed the value of credit notes raised over the
year and for a select period post year end; and
• developed a risk-based approach to perform journal
entry testing on a sample basis to determine the
appropriateness of manual postings to revenue.
Annual Report 2021
21
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
FINEOS CORPORATION HOLDINGS PLC
Key Audit Matter
Capitalisation of development expenditure
(€25.0 million capitalised in the year ended
30 June 2021 with a further €3.3m arising on
acquisition; 2020: €16.8 million)
The Group capitalises costs incurred in the
development of its software. These costs are
then amortised over the estimated useful life of
the software. The costs are mainly comprised of
payroll costs.
The Group’s process for calculating the value of
internally developed software involves
judgement as it includes estimating time which
staff spend developing software, determining the
value attributable to that time, and determining
which projects being developed meet the criteria
to be capitalised.
How Our Audit Addressed the Key Audit Matter
Our work on capitalised development costs focused on
the Group’s process for estimating the time spent by
staff on software development that can be capitalised
under IAS 38, and the nature of the projects
undertaken:
• assessing the nature of a sample of projects against
the requirements of IAS 38 to determine if they were
capital in nature, and the status of ongoing projects;
• assessing the procedures applied by the Group to
review the rates applied to capitalise payroll costs;
• assessing the effectiveness of controls over the
payroll process;
• assessing capitalised costs with reference to actual
payroll information for a sample of employees; and
• assessing the adequacy of the disclosures related to
capitalised development costs in the consolidated
financial statements.
Key Audit Matter
Impairment consideration relating to
capitalised development expenditure (€65.6
million at 30 June 2021; 2020: €50.1 million)
How Our Audit Addressed the Key Audit Matter
We assessed the factors that the Group considered
regarding impairment of capitalised development costs
and whether any indicators of impairment existed.
Intangible assets make up €133.6 million of the
Group’s non-current assets (2020: €53.4
million). The most significant of these
intangibles is capitalised software development
costs of €65.6 million at 30 June 2021 (2020:
€50.1 million).
IAS 36: Impairment of Assets required that finite
life intangible assets be tested for impairment
whenever there is an indication that the
intangible assets may be impaired and this
assessment requires judgement.
The assessment as to whether there are any
indicators of impairment requires judgement
including consideration of both internal and
external sources of information.
This included having regard to:
•
significant changes in the extent or manner in which
the associated software is used;
• potential or actual
developed software;
redundancy or disposal of
• amortisation periods applied by the Group to
develop software relative to its experience of
software lifecycle;
significant changes in the market in which the assets
are used; and
•
• evaluating the Group’s assessment that the useful
lives of intangible assets are appropriate at year
end.
22
FINEOS Corporation Holdings plc
Independent Auditor’s Report (continued) INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
FINEOS CORPORATION HOLDINGS PLC
Key Audit Matter
Impairment consideration relating to
goodwill (€41.4 million at 30 June 2021; 2020:
€nil)
Goodwill of €41.4 million is recorded in the
balance sheet at 30 June 2021 (2020: €nil),
arising on two acquisitions during the year.
Under IAS 36: Impairment of assets, the Group
is required to review goodwill for impairment at
least annually by assessing the recoverable
amount of each cash-generating unit, or group
of cash-generating units, to which the goodwill
relates.
•
•
This is a key audit matter given
•
the size of the balance relative to the total
assets of the group,
the judgements involved in allocating goodwill
to each Cash Generating Unit; and
the forward-looking assumptions applied in
the value-in-use model prepared in assessing
the carrying value of goodwill
(including
forecasted cashflows, future growth rates and
discount
involve
rates
estimation and judgement.
applied), which
How Our Audit Addressed the Key Audit Matter
We performed a number of procedures including the
following:
• For acquisitions which occurred during the year we
agreed the mathematical accuracy of the calculation
of goodwill and validated the appropriateness of the
CGUs selected.
• We obtained a third party report in respect of an
impairment review at
the year end date, which
included forecasts for each relevant cash generating
unit.
of
goodwill,
• We evaluated management’s assessment in relation
their
to impairment
methodology for determining value in use
• We completed a detailed assessment of
the
assumptions underlying the impairment review and
modelling, and evaluated these for reasonableness
based on our knowledge of the business
particularly
• We assessed management’s forecast accuracy
based on historical
forecasts and results, and
challenged the achievability of growth rates included
in the model
• We performed a sensitivity analysis on the
impairment assessment, to consider the impact of
changes in the underlying assumptions
Our application of materiality
We apply the concept of materiality in planning and performing the audit and in evaluating the impact
of misstatements, if any. Materiality is an expression of the relative significance or importance of a
matter in the context of the financial statements. Misstatements in the financial statements are material
if they, individually or in aggregate, could reasonably be expected to influence the economic decisions
of users taken based on the financial statements.
The scope of our audit was influenced by our application of materiality. We set certain quantitative
thresholds for materiality. These, together with qualitative considerations, helped us to determine the
scope of our audit and the nature, timing and extent of our audit procedures on the individual financial
statement line items and disclosures and in evaluating the effect of misstatements, both individually and
on the financial statements as a whole. Based on our professional judgement, we determined materiality
for the consolidated financial statements as a whole as follows:
Annual Report 2021
23
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
FINEOS CORPORATION HOLDINGS PLC
Overall materiality
€1,625,080
How we determined it
1.5% of Group Revenue
Rationale for benchmark
applied
This benchmark is considered the most appropriate because
Revenue is a key benchmark used by management and
shareholders in assessing the performance of the business.
Reporting threshold
We agreed with those charged with governance that we would report
to them misstatements identified during our audit above €48,752 as
well as misstatements below that amount that, in our view, warranted
reporting for qualitative reasons.
We determined materiality for the Company to be €0.2 million which is approximately 1% of the net
assets of
the Company, excluding intercompany balances. Net assets excluding intercompany
balances is deemed the most appropriate benchmark as the Company is a holding company only.
Overview of the scope of the audit
As part of designing our audit, we assessed the risk of material misstatement in the financial statements,
whether due to fraud or error, and then designed and performed audit procedures responsive to those
risks. In particular, we looked at where the Directors made subjective judgements such as making
assumptions on significant accounting estimates.
We tailored the scope of our audit to ensure that we performed sufficient work to be able to give an
opinion on the financial statements as a whole. We used the outputs of a risk assessment, our
understanding of the Company, its environment, controls and critical business processes, to consider
qualitative factors in order to ensure that we obtained sufficient coverage across all financial statement
line items.
Other information
The Directors are responsible for the other information. The other information comprises the information
included in the annual report other than the financial statements and our auditor’s report thereon. Our
opinion on the financial statements does not cover the other information and, except to the extent
otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other
information is materially inconsistent with the financial statements or our knowledge obtained in the
audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or
apparent material misstatements, we are required to determine whether
there is a material
misstatement in the financial statements or a material misstatement of the other information. If, based
on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact.
24
FINEOS Corporation Holdings plc
Independent Auditor’s Report (continued) INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
FINEOS CORPORATION HOLDINGS PLC
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2014
In our opinion, based on the work undertaken in the course of the audit, we report that:
•
the information given in the Directors’ Report for the financial year for which the financial statements
are prepared is consistent with the financial statements; and
the Directors’ Report has been prepared in accordance with applicable legal requirements;
the accounting records of the Group were sufficient to permit the financial statements to be readily
and properly audited; and
the financial statements are in agreement with the accounting records.
•
•
•
We have obtained all the information and explanations which, to the best of our knowledge and belief,
are necessary for the purposes of our audit.
Matters on which we are required to report by exception
Based on the knowledge and understanding of the Group and its environment obtained in the course of
the audit, we have not identified any material misstatements in the Directors' Report. The Companies Act
2014 requires us to report to you if, in our opinion, the requirements of any of Sections 305 to 312 of the
Act, which relate to disclosures of Directors’ remuneration and transactions are not complied with by the
Group.
We have nothing to report in this regard.
Respective Responsibilities
Responsibilities of Directors for the financial statements
As explained more fully in the Directors’ responsibilities statement, the Directors are responsible for
the preparation of the financial statements in accordance with the applicable financial reporting
framework that they give a true and fair view, and for such internal control as management
determines is necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless management either intends to liquidate the Group or the
Company or to cease operations, or has no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor's report
that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee
that an audit conducted in accordance with ISAs (Ireland) will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error and are considered material if, individually
or in the aggregate, they could reasonably be expected to influence the economic decisions of users
taken on the basis of these financial statements.
Annual Report 2021
25
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
FINEOS CORPORATION HOLDINGS PLC
A further description of our responsibilities for the audit of the financial statements is located on the Irish
Auditing and Accounting Supervisory Authority's website at: http://www.iaasa.ie/getmedia/b2389013-
1cf6-458b-9b8f-a98202dc9c3a/Description_of_auditors_responsibilities_for_audit.pdf. This description
forms part of our auditor's report.
The purpose of our audit work and to whom we owe our responsibilities
Our report is made solely to the Company’s members, as a body, in accordance with Section 391 of
the Companies Act 2014. Our audit work has been undertaken so that we might state to the Company’s
members those matters we are required to state to them in an auditor’s report and for no other purpose.
To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than
the Company and the Company’s members, as a body, for our audit work, for this report, or for the
opinions we have formed.
Lorcan Colclough
for and on behalf of Mazars
Chartered Accountants and Statutory Audit Firm
Harcourt Centre,
Block 3,
Harcourt Road,
Dublin 2
25 August 2021
26
FINEOS Corporation Holdings plc
Independent Auditor’s Report (continued) Financial Statements
and Notes
Annual Report 2021
27
Revenue
Cost of sales
Gross profit
Product development and delivery
Sales and marketing
General and administration
Amortisation
Depreciation
Initial public offering costs
Other income
Operating (loss)/profit
Finance income
Finance costs
(Loss)/profit on ordinary activities before taxation
Income tax
Loss for the financial year
Other comprehensive income for the year:
Foreign exchange differences on translation of operations of
foreign subsidiaries and branches
Total comprehensive loss for the year attributable to the
equity holders of the parent
Note
2021
€
2020
€
4
108,338,635
87,808,301
11
12
6
7
8
9
(36,292,052)
(29,348,198)
72,046,583
58,460,103
(44,240,937)
(29,913,935)
(6,182,731)
(4,182,559)
(17,788,790)
(11,635,389)
(16,005,834)
(9,954,905)
(2,073,064)
(1,892,089)
–
(688,563)
1,331,818
1,261,760
(12,912,955)
1,454,423
1,814
27,296
(633,975)
(766,480)
(13,545,116)
715,239
1,060,054
(12,485,062)
(942,422)
(227,183)
144,972
(53,193)
(12,340,090)
(280,376)
Basic and diluted (loss) per share (cents)
10
(4.15)
(0.11)
All results relate to continuing operations.
The notes on pages 37 to 77 are an integral part of these financial statements.
28
FINEOS Corporation Holdings plc
Consolidated Statement of Comprehensive Incomefor the year ended 30 June 2021 ASSETS
Non-current assets
Intangible assets
Property, plant and equipment
Current assets
Trade and other receivables
Cash and cash equivalents
Total Assets
EQUITY AND LIABILITIES
Current liabilities
Trade and other payables
Non-current liabilities
Long-term liabilities
Provisions
Total liabilities
Capital and reserves
Called up share capital presented as equity
Share premium
Foreign exchange reserve
Other undenominated capital
Share option reserve
Reorganisation reserve
Retained earnings
Total equity
TOTAL EQUITY AND LIABILITIES
Note
30 June
2021
€
30 June
2020
€
11
12
14
15
16
16
9
17
17
18
18
18
18
18
134,622,056
53,356,909
6,236,202
7,234,637
140,858,258
60,591,546
29,612,596
23,936,154
13,998,945
39,831,380
43,611,541
63,767,534
184,469,799
124,359,080
34,391,576
28,482,204
13,320,872
12,206,975
416,773
488,045
48,129,221
41,177,224
301,677
272,030
124,239,947
59,903,254
(121,290)
(266,262)
1
1
3,796,560
2,664,088
11,123,985
11,123,985
(3,000,302)
9,484,760
136,340,578
83,181,856
184,469,799
124,359,080
The notes on pages 37 to 77 are an integral part of these financial statements.
On behalf of the Board
Michael Kelly
Director
Tom Wall
Director
25 August 2021
Annual Report 2021
29
Consolidated Statement of Financial Positionas at 30 June 2021 ASSETS
Non-current assets
Financial assets
Current assets
Trade and other receivables
Cash and cash equivalents
TOTAL ASSETS
EQUITY AND LIABILITIES
Current liabilities
Total liabilities
Capital and reserves
Called up share capital presented as equity
Share premium
Other undenominated capital
Reorganisation reserve
Retained earnings
Total equity
TOTAL EQUITY AND LIABILITIES
Note
30 June
2021
€
30 June
2020
€
13
14
15
16
17
17
18
18
22,834,215
22,834,215
121,060,414
59,704,503
401,664
6,204
121,462,078
59,710,707
144,296,293
82,544,922
58,324
58,324
–
–
301,677
272,030
124,239,947
59,903,254
1
1
22,609,813
22,609,813
(2,913,469)
(240,176)
144,237,969
82,544,922
144,296,293
82,544,922
The notes on pages 37 to 77 are an integral part of these financial statements.
On behalf of the Board
Michael Kelly
Director
Tom Wall
Director
25 August 2021
30
FINEOS Corporation Holdings plc
Company Statement of Financial Positionas at 30 June 2021 Called up
share
capital
presented
as equity
€
Share
premium
€
At 30 June 2019
224,402
Foreign
exchange
reserves
arising on
translation
€
(213,069)
–
(53,193)
(53,193)
–
–
–
–
–
–
–
47,628
58,531,261
–
–
1,371,993
–
–
–
–
Other
undenominated
capital
€
Share
option
reserve
€
Reorganisation
reserve
€
Retained
earnings
€
Total
€
1
–
–
–
–
–
–
1
1,762,026
11,123,985
9,711,943
22,609,288
–
–
–
–
(1,371,993)
2,274,055
2,664,088
–
–
–
–
–
–
(227,183)
(227,183)
–
(53,193)
(227,183)
(280,376)
–
58,578,889
–
–
–
2,274,055
11,123,985
9,484,760
83,181,856
Loss for the year
Other
comprehensive
income for the year
Total
comprehensive
income for the year
Issue of share
capital
Reserves transfer
from share options
exercised
Share-based
payment charge
At 30 June 2020
272,030
59,903,254
(266,262)
All amounts are attributable to the equity holders of the Group.
The notes on pages 37 to 77 are an integral part of these financial statements.
Annual Report 2021
31
Consolidated Statement of Changes in Equityfor the year ended 30 June 2021 Consolidated Statement of Changes in Equity (continued)
for the year ended 30 June 2021
Called
up share
capital
presented
as equity
€
Foreign
exchange
reserves
arising on
translation
€
Share
premium
€
272,030
59,903,254
(266,262)
–
–
–
–
–
–
144,972
–
144,972
29,647
63,336,763
–
–
–
999,930
–
–
–
–
–
–
301,677
124,239,947
(121,290)
At 30 June
2020
Loss for the
year
Other
comprehensive
income for the
year
Total
comprehensive
income for the
year
Issue of share
capital
Reserves
transfer from
share options
exercised
Share-based
payment
charge
Translation
adjustment
At 30 June
2021
Other
undenominated
capital
€
Share
option
reserve
€
Reorganisation
reserve
€
Retained
earnings
€
Total
€
1
–
–
–
–
–
–
–
1
2,664,088
11,123,985
9,484,760
83,181,856
–
–
–
–
(999,930)
2,129,018
3,384
–
(12,485,062)
(12,485,062)
–
–
–
–
–
–
–
144,972
(12,485,062)
(12,340,090)
–
63,366,410
–
–
–
–
2,129,018
3,384
3,796,560
11,123,985
(3,000,302) 136,340,578
All amounts are attributable to the equity holders of the Group.
The notes on pages 37 to 77 are an integral part of these financial statements.
32
FINEOS Corporation Holdings plc
Share
premium
€
Other
undenominated
capital
€
Called up
share
capital
presented
as equity
€
224,402
–
–
–
At 30 June 2019
Loss for the year
Other comprehensive
income for the year
Total comprehensive
income for the year
–
–
–
–
Issue of share capital
47,628 58,531,261
Reserves transfer from
share options exercised
–
1,371,993
At 30 June 2020
272,030 59,903,254
Reorganisation
reserve
€
Retained
earnings
€
Total
€
22,609,813
– 22,834,216
–
–
–
–
–
(240,176)
(240,176)
–
–
(240,176)
(240,176)
– 58,578,889
–
1,371,993
22,609,813
(240,176) 82,544,922
1
–
–
–
–
–
1
All amounts are attributable to the equity holders of the parent Company.
The notes on pages 37 to 77 are an integral part of these financial statements.
Annual Report 2021
33
Company Statement of Changes in Equityfor the year ended 30 June 2021 Company Statement of Changes in Equity (continued)
for the year ended 30 June 2021
Called up
share
capital
presented
as equity
€
Share
premium
€
Other
undenominated
capital
€
At 30 June 2020
Loss for the year
Other comprehensive
income for the year
Total comprehensive
income for the year
272,030
59,903,254
–
–
–
–
–
–
Issue of share capital
29,647
63,336,763
Reserves transfer from
share options exercised
–
999,930
At 30 June 2021
301,677 124,239,947
1
–
–
–
–
–
1
Reorganisation
reserve
€
Retained
earnings
€
Total
€
22,609,813
(240,176) 82,544,922
– (2,673,293)
(2,673,293)
–
–
–
– (2,673,293)
(2,673,293)
–
–
–
–
63,366,410
999,930
22,609,813 (2,913,469) 144,237,969
All amounts are attributable to the equity holders of the parent Company.
The notes on pages 37 to 77 are an integral part of these financial statements.
34
FINEOS Corporation Holdings plc
Cash flows from operating activities
Group (loss) after tax
Adjusted for:
Income tax expense
Finance costs
Finance income
Other income
Depreciation
Amortisation
Loss on disposal of fixed assets
Lease expense
Movement in trade and other receivables
Movement in trade and other payables
Net tax paid
Research and development refund received
Effect of movement in exchange rates
Share-based payment expense
Initial public offering costs
Cost of shares allotted to Non-executive Directors
Net cash flows generated from operating activities
Cash flows from investing activities
Interest received
Grant income
Payment for acquisition of subsidiary (net of cash acquired)
Payment for property, plant and equipment
Payment for intangible assets
Net cash used in investing activities
Cash flows from financing activities
Interest paid
Repayment of bank loan
Proceeds from issue of shares
Transaction costs
Net cash generated from financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Note
2021
€
2020
€
9
7
6
12
11
21
19
17
25
12
11
17
17
(12,485,062)
(227,183)
(1,060,054)
633,975
942,422
766,480
(1,814)
(27,296)
(1,331,818)
(1,261,760)
2,073,064
1,892,089
16,005,834
9,954,905
15,214
–
(2,361,939)
(2,088,032)
(2,955,358)
(10,173,710)
1,881,013
7,609,861
(917,421)
(522,881)
1,314,105
1,729,484
572,106
(34,280)
2,129,018
2,274,055
–
–
688,563
24,510
3,510,863
11,547,227
1,814
108,057
(59,353,544)
27,296
–
–
(946,292)
(1,304,183)
(25,296,343)
(17,495,207)
(85,486,308)
(18,772,094)
(73,454)
(1,674,896)
–
(15,000,000)
57,245,894
62,612,075
(1,029,430)
(5,783,942)
56,143,010
40,153,237
(25,832,435)
32,928,370
39,831,380
6,903,010
Cash and cash equivalents at the end of the year
15
13,998,945
39,831,380
Annual Report 2021
35
Consolidated Statement of Cash Flowsfor the year ended 30 June 2021 Cash flows from operating activities
Company (loss) after tax
Adjusted for:
Finance costs
Movement in trade and other receivables
Movement in trade and other payables
Effect of movement in exchange rates
Other non-cash items
Net cash flows used in operating activities
Cash flows from investing activities
Amounts advanced from/(to) Group companies
Payment for acquisition of subsidiary
Net cash used in investing activities
Cash flows from financing activities
Interest paid
Issue of shares
Transaction costs
Net cash generated from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
Note
2021
€
2020
€
(2,673,293)
(240,176)
3,311
(1,846)
58,324
150,201
146
–
–
–
–
24,510
(2,463,303)
(215,520)
14
16
17
16,216,551
(58,332,610)
25
(69,570,941)
–
(53,354,390)
(58,332,610)
17
17
15
(3,311)
(146)
57,245,894
62,612,075
(1,029,430)
(4,057,696)
56,213,153
58,554,233
395,460
6,204
401,664
6,103
101
6,204
36
FINEOS Corporation Holdings plc
Company Statement of Cash Flowsfor the year ended 30 June 2021
1.
General Information
FINEOS Corporation Holdings plc (‘the Company’) is a public limited company incorporated in the Republic of Ireland.
The registered office is FINEOS House, Eastpoint Business Park, Dublin 3.
The principal activity of the Company and its subsidiaries (‘the Group’) is that of enterprise claims and policy
management software for Life, Accident and Health insurers and Employee Benefits providers. Foreign operations
are included in accordance with the significant accounting policies set out in Note 2.
2.
a)
Summary of Significant Accounting Policies
Basis of financial statements
Compliance with IFRS, new standards and interpretation
The financial statements have been prepared in accordance with International Financial Reporting Standards (‘IFRS’)
and interpretations issued by the IFRS Interpretations Committee (‘IFRS IC’) applicable to companies reporting under
IFRS. The financial statements comply with IFRS as issued by the International Accounting Standards Board and as
adopted by the EU, and the Companies Act 2014.
A number of new amendments and interpretations to accounting standards became effective for the Group during
the financial year including:
• Definition of Material – amendments to IAS 1 and IAS 8
• Definition of a Business – amendments to IFRS 3
• Revised Conceptual Framework for Financial Reporting
•
Interest Rate Benchmark Reform – amendments to IFRS 9, IAS 39 and IFRS 7
• COVID-19-Related Rent Concessions - Amendment to IFRS 16
These amendments and interpretations would not have resulted in the accounting applied by the Group changing
and would not have had a material effect on the Group’s financial statements.
New standards, interpretations and amendments not yet effective
There are a number of standards, amendments to standards and interpretations which have been issued by the
IASB that are effective in future accounting periods that the Group has decided not to adopt early.
The following amendments are effective for the period beginning 1 January 2022:
• Onerous Contracts – Cost of Fulfilling a Contract (Amendments to IAS 37);
• Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16);
• Annual Improvements to IFRS Standards 2018-2020 (Amendments to IFRS 1, IFRS 9, IFRS 16 and IAS 41); and
• References to Conceptual Framework (Amendments to IFRS 3).
The Group does not expect any other standards issued by the IASB, but not yet effective, to have a material impact
on the Group.
Historical cost, presentation currency and going concern
The consolidated financial statements have been prepared on the historical cost basis, except where described
otherwise in the policies below. The consolidated financial statements of the Group and the financial statements of
the Company are presented in Euro (‘€’) which is also the functional currency of the Group and Company.
Management has prepared projections and forecasts for the Group. These include consideration of revenue growth,
funding and finance facilities available, and cash reserves held. On this basis, the Directors consider that it is
appropriate to prepare the consolidated financial statements on the going concern assumption.
Exemption from preparing Company statement of comprehensive income
In accordance with Section 304 of the Companies Act 2014 the Company is availing of the exemption from presenting
its individual statement of comprehensive income to the Annual General Meeting and from filing it with the Registrar
of Companies. The Company’s loss for the year to 30 June 2021 was €2,673,293 (2020: €240,176).
Annual Report 2021
37
Notes to the Consolidated Financial Statements b)
Basis of consolidation
The financial statements of the Group incorporate the financial statements of the Company (the parent) and entities
controlled by the Company (its subsidiaries) made up to 30 June each year.
Control is achieved when the Company:
• has the power over the subsidiary entity;
•
is exposed, or has rights, to variable returns from its involvement with the subsidiary entity; and
• has the ability to use its power to affect those returns.
The Group reassesses whether it controls the subsidiaries if facts and circumstance indicate that there are changes
to their control. When the Company has less than a majority of the voting rights of an investee, it considers that it
has power over the investee when the voting rights are sufficient to give it the practical ability to direct the relevant
activities of the investee unilaterally. The Company considers all relevant facts and circumstances in assessing
whether or not the Company’s voting rights in an investee are sufficient to give it power, including:
•
the size of the Company’s holding of voting rights relative to the size and dispersion of holdings of the other
vote holders;
• potential voting rights held by the Company, other vote holders or other parties;
•
rights arising from other contractual arrangements; and
• any additional facts and circumstances that indicate that the Company has, or does not have, the current ability
to direct the relevant activities at the time that decisions need to be made, including voting patterns at previous
shareholders’ meetings.
Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the
Company loses control of the subsidiary. Intra-Group assets and liabilities, equity, income, expenses and cash flows
relating to intra-Group transactions are eliminated on consolidation. Where necessary, the accounting policies of
subsidiaries have been changed to ensure consistency with the policies adopted by the Group.
When the Group loses control over a subsidiary, the profit or loss on disposal is calculated as the difference between
(i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the
previous carrying amount of the assets (including goodwill) and liabilities of the subsidiary and any non-controlling
interests. Amounts previously recognised in other comprehensive income in relation to the subsidiary are accounted
for (i.e. reclassified to profit or loss or transferred directly to retained earnings) in the same manner as would be
required if the relevant assets or liabilities were disposed of.
The fair value of any investments retained in the former subsidiary at the date when control is lost is regarded as the
fair value on initial recognition for subsequent accounting or, when applicable, the cost on initial recognition of an
investment in an associate or jointly controlled entity.
c)
Revenue recognition
The Group recognises revenue from the following major sources:
•
initial product licence fees;
• annual subscriptions; and
•
rendering of services, including professional services and support contracts.
Revenue is measured based on the consideration to which the Group expects to be entitled in a contract with a
customer and excludes amounts collected on behalf of third parties. The Group recognises revenue at a point in
time or over time as contractual performance obligations are fulfilled and control of a product or service transfers
to a customer.
Initial product licence fees
Initial software licence revenue is recognised at a point in time when control is passed to the customer which is upon
delivery of the software to the customer, provided that the Group has no significant related obligations or collection
uncertainties remaining.
38
FINEOS Corporation Holdings plc
Notes to the Consolidated Financial Statements (continued) Licences with related obligations which significantly enhance or modify the IP are considered a single performance
obligation. The performance obligation is satisfied over time as the client avails of consistent access to the services
enhancing and customising the licenced IP. The satisfaction of the performance obligation is reliably measured
primarily on a percentage-of-completion basis. Revenue is recognised over the passage of time using the output
method based on pre-agreed milestones between the parties in accordance with the master licence agreement in
place. Income arising on customised solutions where the provision of the service has not been completed at the
year-end date is deferred and recognised as the service is provided.
Annual subscriptions
Annual subscriptions include all support, maintenance, software updates and cloud services provided by FINEOS
to customers. The promises are considered a single performance obligation which is satisfied over time and the
subscription fees, including the third-party fees, are recognised using the output method on a straight-line basis
which reflects time lapsed, for the continued right to access the licenced IP and to benefit from the support and
maintenance services.
Income arising on subscription where the provision of the service has not been completed at the year-end date is
deferred creating a contract liability which is subsequently recognised as the service is provided.
Rendering of services, including professional services and support contracts
Rendering of services are distinct performance obligations for which revenue is recognised in the accounting period
in which the services are rendered when the outcome of the contract can be estimated reliably.
The performance obligations are satisfied over time and the satisfaction of the promises is measured using the input
method, primarily on a time and materials basis for which revenue is recognised in the period that the services are
provided.
For the services element of fixed price project engagements, the performance obligations are satisfied over time
and the satisfaction of the performance obligations is reliably measured primarily on a percentage-of-completion
basis over the term of the contract. Revenue is recognised using the output method based on pre-agreed milestones
indicating progress to completion. When the outcome of the transaction involving the rendering of services cannot
be estimated reliably, an entity shall recognise revenue only to the extent of the expenses recognised that are
recoverable.
Income arising on rendering of services where the provision of the service has not been completed at the year-end
date is deferred creating a contract liability which is subsequently recognised as the service is provided.
The Group’s policy for contract costs (associated with revenue contracts) is outlined in Note 2(l).
d)
Leases
At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains,
a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for
consideration.
The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use
asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease
payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs
to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located,
less any lease incentives received.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to
the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The estimated useful
lives of right-of-use assets are determined on the same basis as those of property and equipment. In addition, the
right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of
the lease liability.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement
date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group’s
incremental borrowing rate. Generally, the Group uses its incremental borrowing rate as the discount rate.
Annual Report 2021
39
Lease payments included in the measurement of the lease liability comprise:
•
fixed payments, including in-substance fixed payments;
• variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the
commencement date; and
• amounts expected to be payable under a residual value guarantee.
The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there
is a change in future lease payments arising from a change in an index or rate, if there is a change in the Group’s
estimate of the amount expected to be payable under a residual value guarantee.
When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the
right-of-use asset or is recorded in the statement of comprehensive income if the carrying amount of the right-of-use
asset has been reduced to zero.
On the statement of financial position the Group presents the right-of-use asset of office rentals under ‘property,
plant and equipment’ and the right-of-use asset of licences under ‘intangible assets’. The movement on the right-of-
use assets of the Group is disclosed in Notes 11 and 12.
Short-term leases and leases of low-value assets
The Group has elected not to recognise right-of-use assets and lease liabilities for short-term leases of offices and
licences that have a lease term of 12 months or less and leases of low-value assets. The Group recognises the lease
payments associated with these leases as an expense on a straight-line basis over the lease term.
Lease modifications
The Group as lessee accounts for a lease modification as a separate lease if both:
(a) the modification increases the scope of the lease by adding the right to use one or more underlying assets; and
(b) the consideration for the lease increases by an amount commensurate with the stand-alone price for the
increase in scope and any appropriate adjustments to that stand-alone price to reflect the circumstances of the
particular contract.
For a lease modification that is not accounted for as a separate lease, at the effective date of the lease modification
the Group as lessee:
(a) allocates the consideration in the modified contract;
(b) determines the lease term of the modified lease; and
(c) remeasures the lease liability by discounting the revised lease payments using a revised discount rate.
The revised discount rate is determined as the interest rate implicit in the lease for the remainder of the lease
term, if that rate can be readily determined; or the Group’s incremental borrowing rate at the effective date of
the modification, if the interest rate implicit in the lease cannot be readily determined.
For a lease modification that is not accounted for as a separate lease, the Group as lessee accounts for the
remeasurement of the lease liability by:
(a) decreasing the carrying amount of the right-of-use asset to reflect the partial or full termination of the lease for
lease modifications that decrease the scope of the lease. The Group recognises in profit or loss any gain or loss
relating to the partial or full termination of the lease; or
(b) making a corresponding adjustment to the right-of-use asset for all other lease modifications.
e)
Foreign currencies
Foreign currency transactions are translated into the individual entities’ respective functional currencies at
the exchange rates prevailing on the date of the transaction. At the end of each financial year, monetary items
denominated in foreign currencies are retranslated at the rates prevailing as of the end of the financial year.
Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates
prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of
historical cost in a foreign currency are not retranslated.
40
FINEOS Corporation Holdings plc
Notes to the Consolidated Financial Statements (continued) Exchange differences arising on the settlement of monetary items, and on retranslation of monetary items are
included in the statement of comprehensive income for the year. Exchange differences arising on the retranslation
of non-monetary items carried at fair value are included in the statement of comprehensive income for the year
except for differences arising on the retranslation of non-monetary items in respect of which gains and losses are
recognised directly in equity. For such non-monetary items, any exchange component of that gain or loss is also
recognised directly in other comprehensive income.
For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group’s foreign
operations (including comparatives) are expressed in Euro using exchange rates prevailing at the end of the financial
year. Income and expense items (including comparatives) are translated at the average exchange rates for the
period, unless exchange rates fluctuated significantly during that period, in which case the exchange rates at the
dates of the transactions are used. Exchange differences arising, if any, are classified as equity and transferred to the
Group’s translation reserve. Such translation differences are recognised in the statement of comprehensive income
in the period in which the foreign operation is disposed of.
On consolidation, exchange differences arising from the translation of the net investment in foreign entities (including
monetary items that, in substance, form part of the net investment in foreign entities), and of borrowings and
other currency instruments designated as hedges of such investments, are taken to the foreign currency translation
reserve.
Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and
liabilities of the foreign operation and translated accordingly.
f)
Employee benefits
The Group provides a range of benefits to employees, including annual bonus arrangements, paid holiday
arrangements and defined contribution pension plans.
Short-term benefits
Short-term benefits, including holiday pay and other similar non-monetary benefits, are recognised as an expense in
the period in which the service is received. A provision is made for the estimated liability for annual leave as a result
of services rendered by employees up to the end of the financial year.
Defined contribution pension plans
The Group operates a defined contribution plan for its employees. A defined contribution plan is a pension plan
under which the Group pays fixed contributions into a separate entity. Once the contributions have been paid the
Group has no further payment obligations.
The contributions are recognised as an expense when they are due. Amounts not paid are shown in accruals in
the statement of financial position. The assets of the plan are held separately from the Group in independently
administered funds.
Share-based payments
The Group issues equity-settled share-based payments to certain employees. Equity-settled share-based payments
are measured at fair value of the equity instruments (excluding the effect of non-market-based vesting conditions)
at the date of grant. Details regarding the determination of the fair value of equity-settled share-based transactions
are set out in Note 19. The cost of equity-settled transactions with employees is recognised as an expense over the
vesting period, which ends on the date on which the relevant employees become fully entitled to the award. Fair
value is determined by an external valuer using an appropriate pricing model. No expense is recognised for awards
that do not ultimately vest; except for awards where vesting is conditional upon a market condition, which are treated
as vesting irrespective of whether or not the market condition is satisfied, provided that all other performance
conditions are satisfied.
At each year end date before vesting, the cumulative expense is calculated, representing the extent to which the
vesting period has expired and management’s best estimate of the achievement or otherwise of non-market
conditions, the number of equity instruments that will ultimately vest, or in the case of an instrument subject to
a market condition, be treated as vesting as described above. The movement in the cumulative expense since the
previous year end date is recognised in the statement of comprehensive income, with a corresponding entry in
‘share option reserves’.
Annual Report 2021
41
Where the terms of an equity-settled award are modified or a new award is designated as replacing a cancelled
or settled award, the cost based on the original award terms continues to be recognised over the original vesting
period. In addition, an expense is recognised over the remainder of the new vesting period for the incremental fair
value of any modification, based on the difference between the fair value of the original award and the fair value of
the modified award, both as measured on the date of the modification. No reduction is recognised if this difference
is negative.
g)
Interest income
Interest income comprises income on cash held in interest-bearing bank deposits. Interest income is recognised as
it occurs in the statement of comprehensive income, using the effective interest rate method.
h)
Government grants
Government grants are not recognised until there is reasonable assurance that the Group will comply with the
conditions attaching to them and that the grants will be received.
Government grants are recognised in the statement of comprehensive income on a systematic basis over the periods
in which the Group recognises as expenses the related costs for which the grants are intended to compensate.
Specifically, government grants whose primary condition is that the Group should purchase, construct or otherwise
acquire non-current assets are recognised as deferred income in the consolidated statement of financial position
and transferred to the statement of comprehensive income on a systematic and rational basis over the useful lives
of the related assets.
Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose
of giving immediate financial support to the Group with no future related costs are recognised in the statement of
comprehensive income in the period in which they become receivable.
Government grants towards staff re-training costs are recognised as income over the periods necessary to match
them with the related costs and are deducted in reporting the related expense.
Government grants relating to the acquisition of property, plant and equipment or intangible assets are treated
as deferred income and released to the statement of comprehensive income over the expected useful lives of the
assets concerned.
i)
Income tax
The taxation expense for the period comprises current and deferred tax recognised in the reporting period. Tax is
recognised in the statement of comprehensive income, except to the extent that it relates to items recognised in
other comprehensive income or directly in equity. In this case tax is also recognised in other comprehensive income
or directly in equity respectively.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported
in the statement of comprehensive income because it excludes items of income or expense that are taxable or
deductible in other years and it further excludes items that are never taxable or deductible. The Group’s liability for
current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting
period.
A provision is recognised for those matters for which the tax determination is uncertain but it is considered probable
that there will be a future outflow of funds to a tax authority. The provisions are measured at the best estimate of
the amount expected to become payable. The assessment is based on the judgement of tax professionals within
the Group supported by previous experience in respect of such activities and in certain cases based on specialist
independent tax advice.
Deferred tax
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets
and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit
and is accounted for using the liability method.
42
FINEOS Corporation Holdings plc
Notes to the Consolidated Financial Statements (continued) Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are
recognised to the extent that it is probable that taxable profits will be available against which deductible temporary
differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from the
initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets
and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries, except
where the Group is able to control the reversal of the temporary difference and it is probable that the temporary
difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary
differences associated with such investments are only recognised to the extent that it is probable that there will be
sufficient taxable profits against which to utilise the benefits of the temporary differences and they are expected to
reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is
no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled, or the
asset is realised, based on tax laws and rates that have been enacted or substantively enacted at the reporting date.
The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the
manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of
its assets and liabilities.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets
against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the
Group intends to settle its current tax assets and liabilities on a net basis.
j)
Research and development tax credits
Research and development tax credits are recognised as a gain, set against the related expenditure in the year
to which they relate. To the extent that the related expenditure is capitalised, the tax credit is deferred on the
statement of financial position.
k)
Business combinations
The Group applies the acquisition method in accounting for business combinations. The cost of an acquisition is
measured as the aggregate of the consideration transferred (excluding amounts relating to the settlement of pre-
existing relationships), the amount of any non-controlling interest in the acquiree and, in a business combination
achieved in stages, the acquisition date fair value of the acquirer’s previously-held equity interest in the acquiree.
Transaction costs that the Group incurs in connection with a business combination are expensed as incurred.
To the extent that settlement of all or any part of consideration for a business combination is deferred, the fair value
of the deferred component is determined through discounting the amounts payable to their present value at the date
of exchange. The discount component is unwound as an interest charge in the Consolidated Income Statement over
the life of the obligation. Any contingent consideration is recognised at fair value at the acquisition date and included
in the cost of the acquisition. The fair value of contingent consideration at acquisition date is arrived at through
discounting the expected payment to present value. In general, in order for contingent consideration to become
payable, pre-defined revenue targets must be exceeded. Subsequent changes to the fair value of the contingent
consideration will be recognised in profit or loss unless the contingent consideration is classified as equity, in which
case it is not remeasured and settlement is accounted for within equity.
The assets and liabilities arising on business combination activity are measured at their acquisition-date fair values.
Contingent liabilities assumed in business combination activity are recognised as of the acquisition date, where such
contingent liabilities are present obligations arising from past events and their fair value can be measured reliably.
In the case of a business combination achieved in stages, the acquisition date fair value of the acquirer’s previously-
held equity interest in the acquiree is remeasured to fair value as at the acquisition date through profit or loss. When
the initial accounting for a business combination is determined provisionally, any adjustments to the provisional
values allocated to the consideration, identifiable assets or liabilities (and contingent liabilities, if relevant) are made
within the measurement period, a period of no more than one year from the acquisition date.
Annual Report 2021
43
l)
Intangible assets
Goodwill arising on business combinations
Goodwill arising on a business combination is initially measured at cost, being the excess of the cost of the acquisition
over the fair value of the net identifiable assets and liabilities assumed at the date of acquisition. It relates to the
future economic benefits arising from assets which are not capable of being individually identified and separately
recognised. Following initial recognition, goodwill is measured at cost less any accumulated impairment losses.
Intangible assets (other than goodwill) arising on business combinations
Intangible assets are capitalised separately from goodwill as part of a business combination at cost (fair value at date
of acquisition). Subsequent to initial recognition these intangible assets are carried at cost less any accumulated
amortisation and any accumulated impairment losses.
Intangible assets are amortised on a straight-line basis over periods ranging from seven to 20 years, depending on
the nature of the intangible asset. The amortisation expense is disclosed separately on the face of the condensed
consolidated statement of comprehensive income.
Intangible assets acquired separately
Computer software
Computer software separately acquired, including computer software which is not an integral part of an item of
computer hardware, is stated at cost less any accumulated amortisation and any accumulated impairment losses.
Cost comprises purchase price and other directly attributable costs.
Computer software is recognised as an asset only if it meets the following criteria:
• an asset can be separately identified;
•
•
•
it is probable that the asset created will generate future economic benefits;
the development cost of the asset can be measured reliably;
it is probable that the expected future economic benefits that are attributable to the asset will flow to the
entity; and
•
the cost of the asset can be measured reliably.
Costs relating to the development of computer software for internal use are capitalised once the recognition criteria
outlined above are met.
Computer software is amortised on a straight-line basis over its useful economic life, which is considered to be
between three to five years. The amortisation expense is disclosed separately on the face of the consolidated
statement of comprehensive income.
Internally-generated intangible assets
Research and development expenditure
Expenditure on research activities is recognised as an expense in the period in which it is incurred. An internally-
generated intangible asset arising from development (or from the development phase of an internal project) is
recognised if, and only if, all of the following conditions have been demonstrated:
•
•
•
the technical feasibility of completing the intangible asset so that it will be available for use or sale;
the intention to complete the intangible asset and use or sell it;
the ability to use or sell the intangible asset;
• how the intangible asset will generate probable future economic benefits;
•
the availability of adequate technical, financial and other resources to complete the development and to use or
sell the intangible asset; and
•
the ability to measure reliably the expenditure attributable to the intangible asset during its development.
The amount initially recognised for internally-generated intangible assets is the sum of the expenditure incurred from
the date when the intangible asset first meets the recognition criteria listed above. Where no internally-generated
intangible asset can be recognised, development expenditure is recognised in the statement of comprehensive
income in the period in which it is incurred.
44
FINEOS Corporation Holdings plc
Notes to the Consolidated Financial Statements (continued) Development expenditure is amortised on a straight-line basis over its useful economic life, which commences when
the asset is brought into use, and is considered to be between three and 10 years. The amortisation expense is
disclosed separately on the face of the consolidated statement of comprehensive income.
Contract costs
The incremental costs of obtaining a contract are recognised as an asset if the Group expects to recover those costs.
However, those incremental costs are limited to the costs that the Group would not have incurred if the contract had
not been successfully obtained.
Costs incurred to fulfil a contract are recognised as an asset if and only if all of the following criteria are met:
•
•
the costs relate directly to a contract (or a specific anticipated contract);
the costs generate or enhance resources of the entity that will be used in satisfying performance obligations in
the future; and
•
the costs are expected to be recovered.
These include costs such as direct labour, direct materials, and the allocation of overheads that relate directly to the
contract.
The asset recognised in respect of the costs to obtain or fulfil a contract is amortised on a systematic basis that is
consistent with the associated revenue contract’s pattern of transfer of the services to which the asset relates. The
amortisation expense is included within administrative expenses in the consolidated statement of comprehensive
income. The incremental costs of obtaining a contract are expensed if the associated amortisation period would be
12 months or less.
Subsequent to initial recognition, internally-generated intangible assets are reported at cost less accumulated
amortisation and accumulated impairment losses, on the same basis as intangible assets that are acquired separately.
Derecognition of intangible assets
An intangible asset is derecognised on disposal, or when no future economic benefits are expected from use or
disposal. Gains or losses arising from derecognition of an intangible asset, measured as the difference between
the net disposal proceeds and the carrying amount of the asset, are recognised in the statement of comprehensive
income when the asset is derecognised.
m)
Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses.
Cost includes the original purchase price, costs directly attributable to bringing the asset to its working condition for
its intended use, dismantling and restoration costs, and borrowing costs capitalised.
Depreciation
Depreciation is calculated using the straight-line method to write off the cost of property, plant and equipment over
their expected useful lives as follows:
Office equipment
Computer equipment
Fixtures and fittings
Right-of-use assets
20% to 33.33%
33.33%
20% to 33.33%
Lower of the useful life of the asset or the lease term
The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting
period, with the effect of any changes in estimate accounted for on a prospective basis.
Subsequent additions
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate,
only when it is probable that economic benefits associated with the item will flow to the Group and the cost can be
measured reliably.
The carrying amount of any replaced component is derecognised. Major components are treated as a separate
asset where they have significantly different patterns of consumption of economic benefits and are depreciated
separately over their useful lives.
Repairs, maintenance and minor inspection costs are expensed as incurred.
Annual Report 2021
45
Derecognition
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits
are expected to arise from the continued use of the asset. The gain or loss arising on the disposal or retirement of
an asset is determined as the difference between the sales proceeds and the carrying amount of the asset and is
recognised in the statement of comprehensive income.
n)
Financial assets
Investments in subsidiary companies
Investments in subsidiary companies are reflected in the separate financial statements of the parent Company.
Investments in subsidiaries are stated at cost less accumulated impairment losses.
o)
Impairment of goodwill
In the year in which a business combination is effected and where some or all of the goodwill allocated to a particular
cash-generating unit (CGU) arose in respect of that combination, the CGU is tested for impairment prior to the end
of the relevant annual period.
Goodwill is subject to impairment testing on an annual basis and at any time during the year if an indicator of
impairment is considered to exist. Where the carrying value exceeds the estimated recoverable amount (being the
greater of fair value less costs of disposal and value-in-use), an impairment loss is recognised by writing down
goodwill to its recoverable amount.
The recoverable amount of goodwill is determined by reference to the CGU to which the goodwill has been allocated.
Impairment losses arising in respect of goodwill are not reversed once recognised.
p)
Impairment of tangible and intangible assets
The Group reviews the carrying amounts of its tangible and intangible assets as at each reporting date to assess for
any indication of impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in
order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable
amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the
asset belongs.
Irrespective of whether there is any indication of impairment, the Group also tests its intangible assets with indefinite
useful lives and intangible assets not yet available for use for impairment annually by comparing their respective
carrying amounts with their corresponding recoverable amounts.
The recoverable amount of an asset or cash-generating unit is the higher of its fair value less costs to sell and its
value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to
the asset.
An impairment loss for the amount by which the asset’s carrying amount exceeds the recoverable amount is
recognised immediately in the statement of comprehensive income; unless the relevant asset is carried at a revalued
amount, in which case the impairment loss is first treated as a revaluation decrease.
Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased
to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the
carrying amount that would have been determined had no impairment loss been recognised for the asset (cash-
generating unit) in prior years. A reversal of an impairment loss is recognised immediately in the statement of
comprehensive income, unless the relevant asset is carried at a revalued amount, in which case the reversal of the
impairment loss is treated as a revaluation increase.
46
FINEOS Corporation Holdings plc
Notes to the Consolidated Financial Statements (continued) q)
Financial instruments
Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions
of the instrument.
Effective interest method
The effective interest method is a method of calculating the amortised cost of a financial instrument and allocating
the interest income or expense over the relevant period. The effective interest rate is the rate that exactly discounts
estimated future cash receipts or payments (including all fees on points paid or received that form an integral part
of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the
financial instrument, or where appropriate, a shorter period, to the net carrying amount of the financial instrument.
Income and expense are recognised on an effective interest basis for debt instruments other than those financial
instruments at fair value through profit or loss.
Financial assets
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly
attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and
financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial
assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the
acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in
the statement of comprehensive income.
All financial assets are recognised on a trade date - the date on which the Group commits to purchase or sell the
asset. They are initially measured at fair value, plus transaction costs, except for those financial assets classified as
at fair value through profit or loss, which are initially measured at fair value.
Financial assets are classified into the following specified categories: financial assets at fair value through profit or
loss; held-to-maturity investments; loans and receivables; and available-for-sale financial assets. The classification
depends on the nature and purpose for which these financial assets were acquired and is determined at the time of
initial recognition.
Loans and receivables
The Group’s loans and receivables comprise trade and other receivables, amounts due from contract customers,
bank balances and fixed deposits.
Such loans and receivables are non-derivatives with fixed or determinable payments that are not quoted in an
active market. They are measured at amortised cost, using the effective interest method less impairment. Interest is
recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest
would be immaterial.
Impairment of financial assets
The Group always recognises lifetime expected credit losses (‘ECL’) for trade receivables. The ECL on these financial
assets are estimated using a provision matrix based on the Group’s historical credit loss experience, adjusted for
factors that are specific to the receivables, general economic conditions and an assessment of both the current as well
as the forecast direction of conditions at the reporting date, including the time value of money where appropriate.
When there has not been a significant increase in credit risk since initial recognition, the Group measures the loss
allowance for that financial instrument at an amount equal to 12-month ECL which represents the portion of lifetime
ECL that is expected to result from default events on a financial instrument that are possible within 12 months after
the reporting date; except for assets for which a simplified approach was used.
The Group assumes that the credit risk on a financial instrument has not increased significantly since initial
recognition if the financial instrument is determined to have low credit risk at the reporting date.
Annual Report 2021
47
A financial instrument is determined to have low credit risk if:
(a) the financial instrument has a low risk of default;
(b) the debtor has a strong capacity to meet its contractual cash flow obligations in the near term; and
(c) adverse changes in economic and business conditions in the longer term may, but will not necessarily, reduce the
ability of the borrower to fulfil its contractual cash flow obligations.
The Group considers a financial asset to have low credit risk when the asset has an external credit rating of ‘investment
grade’ in accordance with the globally understood definition; or if an external rating is not available, the asset has
an internal rating of ‘performing’. Performing means that the counterparty has a strong financial position and there
are no past due amounts.
Derecognition of financial assets
The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire,
or it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another
entity. If the Group neither transfers nor retains substantially all the risks and rewards of ownership of the financial
asset and continues to control the transferred asset, the Group recognises its retained interest in the asset and an
associated liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards of
ownership of a transferred financial asset, the Group continues to recognise the financial asset and also recognises
a collateralised borrowing for the proceeds receivable.
Financial liabilities and equity
Classification of debt or equity
Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance
of the contractual arrangements and the definitions of a financial liability and an equity instrument.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all
of its liabilities. Equity instruments are recorded at the proceeds received, net of direct issue costs.
Ordinary share capital
Ordinary share capital is classified as equity. Incremental costs directly attributable to the issue of ordinary shares
and share options are recognised as a deduction from equity.
Financial liabilities
Financial liabilities are classified as either financial liabilities at fair value through profit or loss or other financial
liabilities.
Financial liabilities are classified as at fair value through profit or loss if the financial liability is either held for trading
or it is designated as such upon initial recognition.
Other financial liabilities
Trade and other payables
Trade and other payables are initially measured at fair value, net of transaction costs, and are subsequently measured
at amortised cost, where applicable, using the effective interest method, with interest expense recognised on an
effective yield basis.
Borrowings
Interest-bearing bank loans and overdrafts are initially measured at fair value, and are subsequently measured at
amortised cost, using the effective interest method. Any difference between the proceeds (net of transaction costs)
and the settlement or redemption of borrowings is recognised over the term of the borrowings.
Derecognition of financial liabilities
The Group derecognises financial liabilities when, and only when, the Group’s obligations are discharged, cancelled
or they expire.
48
FINEOS Corporation Holdings plc
Notes to the Consolidated Financial Statements (continued) Derivative financial instruments
In order to manage interest rate and foreign currency risks, the Group has from time to time entered into derivative
financial instruments (principally currency swaps and forward foreign exchange contracts). Derivative financial
instruments are recognised initially at fair value on the date on which a derivative contract is entered into and are
subsequently remeasured at fair value. The carrying value of derivatives is fair value based on discounted future cash
flows and adjusted for counterparty risk. Future floating rate cash flows are estimated based on future interest rates
(from observable yield curves at the end of the reporting period). Fixed and floating rate cash flows are discounted
at future interest rates and translated at period-end foreign exchange rates. At the statement of financial position
date, no derivative instruments were recognised on the statement of financial position.
r)
Provisions and contingencies
Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event,
it is probable that the Group will be required to settle that obligation and a reliable estimate can be made of the
amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present
obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation.
Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is
the present value of those cash flows (when the effect of the time value of money is material).
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third
party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the
amount of the receivable can be measured reliably.
Contingencies
Contingent liabilities, arising as a result of past events, are not recognised when (i) it is not probable that there will
be an outflow of resources or that the amount cannot be reliably measured at the reporting date or (ii) when the
existence will be confirmed by the occurrence or non-occurrence of uncertain future events not wholly within the
Group’s control. Contingent liabilities are disclosed in the financial statements unless the probability of an outflow
of resources is remote.
Contingent assets are not recognised. Contingent assets are disclosed in the financial statements when an inflow of
economic benefits is probable.
s)
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits and other short-term highly liquid
investments which are readily convertible to known amounts of cash and are subject to insignificant risk of changes
in value.
t)
Related party transactions
Related party transactions are disclosed in accordance with IAS 24 Related Party Disclosures and the Companies Act
2014.
3.
Significant Accounting Judgements,
Estimates and Assumptions
In preparing these financial statements, the Group and Company make judgements, estimates and assumptions
concerning the future that impact the application of policies and reported amounts of assets, liabilities, income and
expenses.
The resulting accounting estimates calculated using these judgements and assumptions are based on historical
experience and expectations of future events and may not equal the actual results. Estimates and underlying
assumptions are reviewed on an ongoing basis, and revisions to estimates are recognised prospectively.
Annual Report 2021
49
The judgements and key sources of assumptions and estimation uncertainty that have a significant effect on the
amounts recognised in the financial statements are discussed below.
Critical judgements made in applying the Group’s and Company’s accounting policies
Information about judgements made in applying accounting policies that have the most significant effects on the
amounts recognised in these financial statements are set out below:
Group:
(a) Development expenditure
The Group capitalises a proportion of costs related to software development in accordance with its accounting
policy. The Group regularly reviews the carrying value of capitalised development costs, which are amortised over
three to 10 years, to ensure they are not impaired and the amortisation period is appropriate. Management makes
judgements about the technical feasibility and economic benefit of completed products, as well as the period of time
over which the economic benefit will cease.
(b) Useful life of intangible assets (excluding goodwill)
Intangible assets are amortised over their useful lives. The estimated useful life reflects management’s estimate of
the period that the Group intends to derive future economic benefits from the use of intangible assets. Changes in
the economic usage and developments could affect the economic useful life of the intangible fixed asset which could
then consequently impact future amortisation charges. The carrying amount of the intangible assets of the Group
(excluding goodwill) as at 30 June 2021 was €93,290,024 (2020: €53,356,909) (see Note 11).
(c) Revenue recognition
The Group recognises revenue in line with IFRS 15 Revenue from Contracts with Customers. Management applies
judgement in determining the nature, variable considerations, and timing of satisfaction of promises in the context
of the contract that meet the basis of revenue recognition criteria. Significant judgements include identifying
performance obligations, identifying distinct intellectual property licences, and determining the timing of satisfaction
and approach in recognising the revenue of those identified performance obligations; whether a point in time or
a passage of time approach is to be adopted. See applied revenue recognition criteria for each revenue streams
within Note 2(c) for details on the Group’s revenue recognition policies adopted. The amount of the Group’s revenue
recognised as at 30 June 2021 was €108,338,635 (2020: €87,808,301) (see Note 4).
(d) Impairment of goodwill
The impairment testing process requires management to make significant judgements and estimates regarding the
future cash flows expected to be generated by CGUs to which goodwill has been allocated. In assessing value-in-
use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects
current market assessments of the time value of money and the risks specific to the asset for which the future cash
flow estimates have not been adjusted. The carrying amount of goodwill as at 30 June 2021 was €41,332,032 (2020:
€Nil) (see Note 11).
Company:
(a) Impairment of investment in subsidiaries
Investments in subsidiary companies are reflected in the separate financial statements of the parent Company at
cost less accumulated impairment losses. At the end of each financial year, an assessment is made on whether
there are indicators that the Company’s investments are impaired. The Company’s assessment is based on the
performance of the underlying subsidiary companies and no impairment has been recognised in the year under
review. The carrying amount of investments in subsidiaries in the Company statement of financial position at 30 June
2021 was €22,834,215 (2020: €22,834,215).
50
FINEOS Corporation Holdings plc
Notes to the Consolidated Financial Statements (continued) 4.
Revenue
Amount of revenue by class of activity:
Professional services
Annual subscriptions
Initial product licence fees
Amount of revenue by market:
North America
APAC
EMEA
Segment information
2021
€
2020
€
66,443,223
58,303,497
40,128,739
27,012,410
1,766,673
2,492,394
108,338,635
87,808,301
78,845,857
51,806,318
24,131,540
30,657,403
5,361,238
5,344,580
108,338,635
87,808,301
The Group manages its operations as a single business operation and there are no parts of the Group that qualify
as operating segments. The Board assesses the financial performance of the Group on an integrated basis only and
accordingly, the Group is managed on the basis of a single segment.
Major customers
In each of 2021 and 2020 financial years there were three customers that each accounted for 10% or more of the
Group’s revenue, as follows:
Client 1
Percentage of total revenue
Client 2
Percentage of total revenue
Client 3
Percentage of total revenue
Contract assets and contract liabilities
Contract assets
2021
€
2020
€
14,032,231
16,494,211
12.9%
18.8%
13,348,455
12,040,943
12.3%
13.7%
10,822,766
12,034,533
9.9%
13.7%
Contract assets are disclosed separately as unbilled receivables in Trade and other receivables amounting to
€1,247,706 (2020: €639,097) (see Note 14).
Contract liabilities
Contract liabilities are disclosed separately as deferred revenue in Trade and other payables amounting to
€17,013,665 (2020: €14,201,684) (see Note 16). The Group is availing of the practical expedient which exempts the
disclosure of unsatisfied performance obligations to date since both of the following criteria are met:
•
•
the performance obligations are part of contracts which have an original expected duration of one year or less;
and
the Group recognises revenue from the satisfaction of the performance obligations which have been completed
to date and to which the Group has a right to invoice.
Annual Report 2021
51
Employees
5.
The average monthly number of persons employed by the Group (and Directors) during the year was as follows:
Product development and delivery
Sales and marketing
Administration
The staff costs comprise:
Wages and salaries
Social welfare costs
Pension costs
Share-based payment expense
Directors’ remuneration
Directors’ remuneration in respect of qualifying
services in respect of FINEOS Corporation Limited:
Emoluments
Pension/superannuation
Shares allotted
Share-based payment expense
Gain on exercise of options
2021
Number
2020
Number
711
30
53
794
2021
€
554
19
44
617
2020
€
75,912,624
54,024,075
6,114,359
3,391,835
2,129,018
4,753,053
2,839,647
2,274,055
87,547,836
63,890,830
2021
€
2020
€
1,169,025
1,226,598
42,597
–
25,752
3,319,860
4,557,234
41,207
24,510
–
921,117
2,213,432
The number of Directors to whom retirement benefits are accruing under defined contribution scheme pension/
superannuation costs noted above is three (2020: three).
Other than as shown above any further disclosures in respect of Sections 305 and 306 of the Companies Act 2014
are €Nil for the financial year presented.
Staff costs as qualifying development expenditure
The qualifying development expenditure generating an asset as shown in Note 11 consists of qualifying staff costs
incurred in relation to the development of the Group’s projects. During the current year, qualifying staff costs
amounted to €24,965,485 (2020: €16,787,883).
52
FINEOS Corporation Holdings plc
Notes to the Consolidated Financial Statements (continued) 6.
Other Income
Research and development tax credit
Grant and other income
2021
€
2020
€
1,305,798
1,228,303
26,020
33,457
1,331,818
1,261,760
The Company avails of research and development tax credits pursuant to Section 33, Finance Act 2004.
7.
Finance Costs
Bank charges and interest
Lease interest
Unwinding of discount applicable to contingent consideration
2021
€
74,674
476,627
82,674
2020
€
258,563
507,917
–
633,975
766,480
8.
(Loss)/Profit on Ordinary Activities Before Taxation
The (loss)/profit on ordinary activities before taxation is stated
after charging/(crediting):
Auditor’s remuneration – Audit of Group companies
– Other assurance services
– Tax advisory services
– Other non-audit services
Amortisation (Note 11)
Depreciation (Note 12)
Research and development expense
Research and development tax credit (Note 6)
Share-based payment expense (Note 19)
Acquisition-related costs (Note 25)
Foreign exchange loss/(gain)
2021
€
2020
€
122,150
–
25,000
–
16,005,834
2,073,064
111,000
10,000
46,000
–
9,954,905
1,892,089
16,341,001
11,639,095
(1,305,798)
(1,228,303)
2,129,018
2,101,824
289,265
2,274,055
–
(770,281)
The other assurance services and tax advisory services fees for the prior year very substantially relate to advisory
work in connection with the IPO.
Annual Report 2021
53
9.
(a)
Tax on (Loss)/Profit on Ordinary Activities
Tax on (loss)/profit on ordinary activities
The tax charge is made up as follows:
Current tax:
Overseas taxation
Foreign withholding tax
Adjustments in respect of previous years
Total current tax
Deferred tax:
2021
€
2020
€
432,596
832,700
–
(78,557)
–
2,482
354,039
835,182
Origination and reversal of timing differences
(1,414,093)
107,240
Tax on (loss)/profit on ordinary activities
(1,060,054)
942,422
Overseas taxation has been provided on the results of overseas subsidiary companies at the appropriate overseas
rates of tax.
(b)
Factors affecting the tax charge for the year
The current tax charge for the year differs from the amount computed by applying the standard rate of corporation
tax in the Republic of Ireland to the (loss)/profit on ordinary activities before taxation. The sources and tax effects of
the differences are explained below:
(Loss)/profit on ordinary activities before tax
2021
€
(13,545,116)
(Loss)/profit on ordinary activities multiplied by the standard rate of tax of 12.5%
(1,693,139)
2020
€
715,239
89,405
100,983
53,997
402,764
1,286
361,590
(66,720)
–
2,482
(110,605)
107,240
73,172
59,092
185,862
28
410,708
(372,431)
–
(78,557)
1,769,304
(1,414,093)
(1,060,054)
942,422
Depreciation greater than capital allowances
Short-term timing differences
Non-deductible expenses/non-taxable income
Higher tax charge on passive income
Higher rates of tax on foreign income
Research and development tax credits claimed
Foreign withholding tax
Adjustments in respect of previous years
Losses carried forward/(utilised)
Deferred tax
Total tax charge
54
FINEOS Corporation Holdings plc
Notes to the Consolidated Financial Statements (continued) (c)
Deferred tax asset/(liability)
Group
At beginning of year
(Charged)/released to the statement
of comprehensive income (Note 9(a))
Foreign exchange
Deferred tax on acquisition
At end of year
The deferred tax asset/(liability) is analysed as follows:
Timing differences between depreciation
and capital allowances
Timing differences on holiday leave
Timing differences between losses
forward and capitalised development costs
Other timing differences
At end of year
Being:
Deferred tax asset
Provision for deferred tax
Deferred tax asset
10.
Earnings Per Share
Basic earnings per share
(Loss) attributed to ordinary shareholders
Weighted average number of ordinary shares outstanding
2021
€
2020
€
10,463
117,698
1,414,093
(107,240)
8,374
(886,334)
5
546,596
10,463
173,437
450,946
134,979
401,012
(249,023)
171,236
(636,048)
110,520
546,596
10,463
963,369
(416,773)
498,508
(488,045)
546,596
10,463
2021
€
2020
€
(12,340,090)
(280,376)
297,122,910
261,429,432
Basic (loss) per share (cent)
(4.15)
(0.11)
Basic (loss) per share is calculated by dividing the loss for the year after taxation attributable to ordinary shareholders
by the weighted average number of ordinary shares in issue during the year.
Diluted earnings per share
(Loss) attributed to ordinary shareholders
Weighted average number of ordinary shares outstanding
(12,340,090)
(280,376)
297,122,910
261,429,432
Diluted (loss) per share (cent)
(4.15)
(0.11)
The calculation of diluted earnings per share has been based on the loss attributable to ordinary shareholders and
weighted-average number of ordinary shares outstanding after adjustments for the effects of all dilutive ordinary
shares. Potential ordinary shares are treated as dilutive when, and only when, their conversion to ordinary shares
would decrease EPS or increase the loss per share from continuing operations.
Annual Report 2021
55
11.
Intangible Assets
Right-of-
use assets
€
Development
expenditure
€
Contract
costs
€
Computer
Software
€
Technology
€
Customer
relationships
€
Goodwill
€
Total
€
Group 2021
Cost
At 30 June 2020
4,533,218
81,700,092
2,367,741
341,736
Additions
Arising on
acquisition
Written off
Translation
adjustment
1,552,240
24,965,485
330,858
–
–
–
3,298,150
341,136
–
(111,917)
5,912
(4,750)
–
–
–
–
–
–
–
–
–
–
88,942,787
26,848,583
7,866,144
17,778,516
41,441,051
70,724,997
–
–
–
(111,917)
(25,685)
(61,948)
(109,019)
(195,490)
At 30 June 2021
6,085,458
109,969,639
2,923,068
341,736
7,840,459
17,716,568
41,332,032 186,208,960
Amortisation
At 30 June 2020
3,051,119
31,567,254
655,858
311,647
–
–
Charged in the
year
Translation
adjustment
913,848
12,857,272
641,820
30,089
857,075
705,730
–
(8,381)
(2,213)
–
3,173
2,613
At 30 June 2021
3,964,967
44,416,145
1,295,465
341,736
860,248
708,343
–
–
–
–
35,585,878
16,005,834
(4,808)
51,586,904
Net book
amounts
At 30 June 2021
2,120,491
65,553,494
1,627,603
–
6,980,211
17,008,225
41,332,032 134,622,056
At 30 June 2020
1,482,099
50,132,838
1,711,883
30,089
–
–
–
53,356,909
56
FINEOS Corporation Holdings plc
Notes to the Consolidated Financial Statements (continued) Group 2020
Cost
At 30 June 2019
Additions
Right-of-use
assets
Development
expenditure
€
€
Contract
costs
€
Computer
software
€
Total
€
2,743,877
64,912,209
1,660,417
341,736
69,658,239
1,789,341
16,787,883
707,324
–
19,284,548
At 30 June 2020
4,533,218
81,700,092
2,367,741
341,736
88,942,787
Amortisation
At 30 June 2019
2,371,132
22,744,835
Charged in the year
679,987
8,822,419
271,833
384,025
243,173
25,630,973
68,474
9,954,905
At 30 June 2020
3,051,119
31,567,254
655,858
311,647
35,585,878
Net book amounts
At 30 June 2020
1,482,099
50,132,838
1,711,883
30,089
53,356,909
At 30 June 2019
372,745
42,167,374
1,388,584
98,563
44,027,266
Development expenditure
In total, research and development costs for the Group amounted to €41,306,486 (2020: €28,426,978) in 2021,
out of which €24,965,485 (2020: €16,787,883) qualifies for capitalisation under IAS 38 Intangible Assets. Qualifying
development expenditure is amortised on a straight-line basis over its useful economic life, which is considered to be
between three and 10 years. The amortisation expense amounts to €12,857,272 in 2021 (2020: €8,822,419), of which
€105,000 (2020: €105,000) relates to the amortisation of previously capitalised borrowing costs.
Cash-generating units
Goodwill acquired through business combination activity has been allocated to CGUs that are expected to benefit
from synergies in that combination. The CGUs represent the lowest level within the Group at which the associated
goodwill is monitored for internal management purposes and are not larger than the operating segments determined
in accordance with IFRS 8 Operating Segments. A total of 3 CGUs have been identified.
Impairment testing methodology
Goodwill is subject to impairment testing on an annual basis. A value-in-use discounted cash flow model has been
used at 30 June 2021 to value each of the three CGUs. The cash flow forecasts are primarily based on a financial
budget for year ending 30 June 2022 and detailed management projections for years ending 30 June 2023 to 30 June
2025. These include projected revenues, gross margins and expenses and have been determined with reference to
historical company experience, industry data and management’s expectation for the future.
The value-in-use represents the present value of the future cash flows, including the terminal value, discounted at
a rate appropriate to each CGU. The discount rates (post tax) used range from 7.9% to 13.8%; these rates are in line
with the Group’s estimated weighted average cost of capital, arrived at using the Capital Asset Pricing Model.
Annual Report 2021
57
Significant goodwill amounts
The goodwill allocated to the Limelight and Spraoi CGUs account for 89% and 11% of the total carrying amount of
goodwill shown in Note 11 respectively. The additional disclosures required for these CGUs are as follows:
Goodwill allocated to the CGU as at 30 June 2021 (thousands)
Post-tax discount rate per annum
Pre-tax discount rate per annum
Long-term growth rate assumption
Value in use (present value of future cash flows) (thousands)
Carrying value (thousands)
2021
Limelight
€36,608
9.4%
15.9%
2%
€192,284
€65,056
2021
Spraoi
€4,724
13.3%
15.4%
2%
€8,859
€7,995
The key assumptions and methodology used in respect of the Limelight and Spraoi CGUs are consistent with those
described above. The values applied to each of the key estimates and assumptions are specific to the individual
CGUs and were derived from a combination of internal and external factors and took into account the cash flows
specifically associated with the business.
Sensitivity analysis
Management has performed sensitivity analysis and assessed reasonable changes for key assumptions and has not
identified any instances that could cause the carrying amount of any of the CGUs to exceed its recoverable amount.
12.
Property, Plant and Equipment
Group 2021
Cost
At 30 June 2020
Additions
Arising on acquisition
Disposals
Translation adjustment
Right-of-use
assets
€
Office
equipment
€
Computer
equipment
€
Fixtures and
fittings
€
Total
€
9,403,441
16,675
–
(210,394)
41,240
790,673
3,986,725
1,889,880
16,070,719
927
208
–
3,797
756,516
151,174
188,849
4,156
962,967
155,538
(192,839)
(180,255)
(583,488)
5,325
3,837
54,199
At 30 June 2021
9,250,962
795,605
4,706,901
1,906,467
16,659,935
Depreciation
At 30 June 2020
Charged in the year
Disposals
Translation adjustment
3,770,503
1,111,831
(160,300)
25,596
656,928
55,777
–
(3,060)
2,740,084
1,668,567
794,352
(181,911)
14,117
111,104
(180,255)
400
8,836,082
2,073,064
(522,466)
37,053
At 30 June 2021
4,747,630
709,645
3,366,642
1,599,816
10,423,733
Net book amounts
At 30 June 2021
4,503,332
85,960
1,340,259
306,651
6,236,202
At 30 June 2020
5,632,938
133,745
1,246,641
221,313
7,234,637
58
FINEOS Corporation Holdings plc
Notes to the Consolidated Financial Statements (continued) Group 2020
Cost
At 30 June 2019
Additions
Translation adjustment
Right-of-use
assets
€
Office
equipment
€
Computer
equipment
€
Fixtures and
fittings
€
Total
€
8,894,069
545,734
(36,362)
685,451
108,860
(3,638)
2,996,543
1,003,537
1,701,812
14,277,875
191,786
1,849,917
(13,355)
(3,718)
(57,073)
At 30 June 2020
9,403,441
790,673
3,986,725
1,889,880
16,070,719
Depreciation
At 30 June 2019
Charged in the year
Translation adjustment
2,613,940
1,177,699
(21,136)
623,448
2,120,443
1,624,320
42,374
(8,894)
622,453
(2,812)
49,563
(5,316)
6,982,151
1,892,089
(38,158)
At 30 June 2020
3,770,503
656,928
2,740,084
1,668,567
8,836,082
Net book amounts
At 30 June 2020
5,632,938
133,745
1,246,641
221,313
7,234,637
At 30 June 2019
6,280,129
62,003
876,100
77,492
7,295,724
13.
Financial Assets
Company
Shares in Group undertakings – unlisted, at cost:
At beginning and end of year
Details of subsidiary undertakings are included in Note 28.
2021
€
2020
€
22,834,215
22,834,215
Annual Report 2021
59
14.
Trade and Other Receivables
Group
Trade receivables
Unbilled receivables
Other receivables
Prepayments
Research and development tax credits
Value added tax recoverable
Corporation tax recoverable
Deferred tax asset (Note 9)
Company
Prepayments
Amounts owed by subsidiary undertakings
Trade and other receivables
2021
€
2020
€
22,249,112
17,566,095
1,247,706
148,828
1,984,899
1,492,056
1,084,099
442,527
963,369
639,097
210,380
1,481,820
2,289,342
1,130,024
120,888
498,508
29,612,596
23,936,154
2021
€
1,846
2020
€
–
121,058,568
59,704,503
121,060,414
59,704,503
The carrying amounts of trade receivables and other receivables approximate their fair value largely due to the
short-term maturities and nature of these instruments. All trade receivables are due within the Group’s and
Company’s normal terms, which are 30 days. Trade receivables are shown net of a provision for expected credit
losses (see Note 24 (ii)).
Unbilled receivables
The terms of the accrued income are based on underlying invoices.
Taxes and tax credits
Taxes and social welfare costs are subject to the terms of the relevant legislation.
15. Cash and Cash Equivalents
Group
Cash and cash equivalents
Company
Cash and cash equivalents
There are no restrictions on the cash held.
60
FINEOS Corporation Holdings plc
2021
€
2020
€
13,998,945
39,831,380
2021
€
2020
€
401,664
6,204
Notes to the Consolidated Financial Statements (continued) 16.
Trade and Other Payables
Current
Group
Trade payables
Corporation tax
Value added tax
Employee taxes and levies
Accruals
Deferred revenue
Research and development tax credit
Lease liabilities (Note 21)
Contingent consideration
Company
Trade payables
Accruals
Non-current
Group
Lease liability (Note 21)
Research and development tax credit
Contingent consideration
Trade and other payables
2021
€
2020
€
3,289,594
2,504,346
176,478
32,996
407,864
77,396
1,209,036
2,347,389
7,490,130
6,136,009
17,013,665
14,201,684
1,269,063
1,282,910
2,151,497
1,524,606
1,759,117
–
34,391,576
28,482,204
2021
€
19,824
38,500
58,324
2021
€
2020
€
–
–
–
2020
€
5,262,444
6,251,540
5,180,303
5,955,435
2,878,125
–
13,320,872
12,206,975
The carrying amounts of trade and other payables approximate their fair value largely due to the short-term
maturities and nature of these instruments. The repayment terms of trade payables vary between on demand and
30 days. No interest is payable on trade payables.
Reservation of title
Certain trade payables purport to claim a reservation of title clause for goods supplied. Since the extent to which
these payables are secured at any time depends on a number of conditions, the validity of some of which is not
readily determinable, it is not possible to indicate how much of the above was effectively secured.
Amounts due to Group companies
The amounts due to Group and related companies are unsecured, interest free and are repayable on demand.
Accruals
The terms of the accruals are based on underlying invoices.
Taxes and social welfare costs
Taxes and social welfare costs are subject to the terms of the relevant legislation. Interest accrues on late payments.
No interest was due at the financial year end date.
Annual Report 2021
61
Deferred revenue
Income arising on support contracts and subscription sales where the provision of the service has not been completed
at the year-end date is deferred and recognised as the service is provided.
Contingent consideration
On an undiscounted basis, the corresponding future payments relating to contingent consideration, for which the
Group may be liable, ranges from $3.5 million to $6.6 million (€2.9 million to €5.5 million). This is based on a range of
estimated potential outcomes of the expected payment amounts primarily dependant on underlying performance
metrics as set out in the Spraoi merger agreement. The fair value of contingent consideration is arrived at through
discounting the expected payment to present value. Based on a reasonable possible change in assumptions, the fair
value ranges from $3.0 million to $5.4 million (€2.5 million to €4.5 million) on a discounted basis.
The movement in contingent consideration during the year was as follows:
Arising on acquisition during the year (Note 25)
Discount unwinding
Translation adjustment
At 30 June 2021
17. Called up Share Capital
2021
€
4,447,533
82,674
107,035
4,637,242
Authorised share capital (Group and Company)
Ordinary shares
€0.001
4,500,000
4,500,000
Nominal value
(per share)
2021
€
2020
€
Issued share capital presented as equity
Ordinary shares
€0.001
301,677
272,030
The movement in issued share capital during the financial year was as follows:
No. of
shares
Nominal
value (per
share)
Issued share capital
At 1 July 2020
Share issue – equity raise
Share issue – SPP
Share issue – acquisition of Limelight
272,029,851
19,953,052
1,877,520
2,743,315
Share issue – exercise of share options
5,072,870
€0.001
€0.001
€0.001
€0.001
€0.001
Share
capital
€
Share
premium
€
Total
€
272,030
59,903,254
60,175,284
19,953
51,451,527
51,471,480
1,878
2,743
5,073
4,897,982
4,899,860
7,147,203
7,149,946
869,481
874,554
Transaction costs accounted for as
a deduction from equity
–
301,676,608
–
(1,029,430)
(1,029,430)
301,677
123,240,017
123,541,694
Transfer from share option reserve
–
–
999,930
999,930
At 30 June 2021
301,676,608
301,677
124,239,947
124,541,624
62
FINEOS Corporation Holdings plc
Notes to the Consolidated Financial Statements (continued) The equivalent disclosure for the prior year is as follows:
Issued share capital
At 1 July 2019
Share issue – equity raise
No. of
shares
Nominal
value (per
share)
224,401,590
39,980,121
€0.001
€0.001
€0.001
Share
capital
€
224,402
Share
premium
€
Total
€
–
224,402
39,980
61,204,078
61,244,058
7,648
1,384,879
1,392,527
Share issue – exercise of share options
7,648,140
Transaction costs accounted for as
a deduction from equity
–
272,029,851
–
(4,057,696)
(4,057,696)
272,030
58,531,261
58,803,291
Transfer from share option reserve
–
–
1,371,993
1,371,993
At 30 June 2020
272,029,851
272,030
59,903,254
60,175,284
The shares of the Company were restructured in July 2019 leading up to the Company’s IPO on the ASX in August 2019.
The balances shown for 1 July 2019 are as if the restructure in shares had occurred on 30 June 2019. See pages 61
and 62 of the Group’s Annual Report for the year ended 30 June 2020 for further detail.
FINEOS undertook an equity raising on 11 August 2020 to provide funding towards the acquisition of Limelight.
FINEOS successfully completed a fully underwritten institutional placement, raising approximately AU$85 million
through the issue of 19,953,052 new fully paid CHESS Depositary Interests over FCL shares (‘CDIs’). The placement
was undertaken at an offer price of AU$4.26 per new CDI.
FINEOS also undertook a non-underwritten Security Purchase Plan (‘SPP’) raising approximately AU$8 million
through the issue of 1,877,520 new fully paid CDIs, at an offer price of AU$4.26 per new CDI, which completed on
14 September 2020.
On 26 August 2020, 2,743,315 new fully paid CDIs were issued as part consideration for the acquisition price of
Limelight. The CDIs were valued at AU$4.2668 per new CDI.
Reconciliation of shares issued to proceeds
Shares issued at nominal amount
Premium arising on shares issued
Total value of shares issued
Shares issued as consideration for Limelight
Shares allotted to Non-executive Directors
Proceeds from issue of shares
2021
€
29,647
64,366,193
64,395,840
(7,149,946)
–
2020
€
47,628
62,588,957
62,636,585
–
(24,510)
57,245,894
62,612,075
In 2020, 8,000 Ordinary shares were allotted to each of Anne O’Driscoll and Martin Fahy for their services in relation
to pre-IPO work.
Annual Report 2021
63
18.
Reserves
Foreign exchange reserve
The foreign exchange reserve represents gains/losses arising on retranslating the net assets of overseas operations
into Euro.
Retained earnings
The retained earnings represent cumulative gains and losses recognised, net of transfers to/from other reserves and
dividends paid.
Other undenominated capital
This reserve records the nominal value of shares repurchased by the Company.
Share option reserve
The share option reserve represents the movement in share-based payments. The movement in the cumulative
expense since the previous year end date is recognised in the statement of comprehensive income, with a
corresponding entry in ‘share option reserve’.
Re-organisation reserve
FINEOS Corporation Holdings plc (‘FINEOS’) was incorporated on 12 December 2018 and the Directors elected at that
date to account for the restructure of the Group as a capital re-organisation rather than a business combination.
The reorganisation reserve represents the difference between the fair value of the shares issued to effect the
reorganisation and the nominal value of the shares acquired. See Note 2(a) on page 35 of the Group’s Annual Report
for the year ended 30 June 2020 for further detail.
19.
Share-Based Payment Expense
The total share-based payment expense for the Group’s equity incentive schemes charged to general and
administration costs in the consolidated statement of comprehensive income is as follows:
Share-based payment expense
Details of the schemes operated by the Group are set out below.
2019 Equity Incentive Plan
2021
€
2020
€
2,129,018
2,274,055
The ‘2019 Equity Incentive Plan’ was adopted by the Board on 24 June 2019 and approved by the shareholders
of the Company on 9 July 2019. It became effective on Listing. The 2019 Equity Incentive Plan, administered by
the Remuneration and Nomination Committee, allows for the grant of the following awards to employees and
contractors: options, restricted share awards, RSU awards and performance awards. Total awards under the 2019
Equity Incentive Plan are subject to a limit of 5% of the ordinary issued share capital of the Company at any time. The
exercise of awards may be conditional upon the satisfaction of performance factors during a performance period as
determined by the Remuneration and Nomination Committee and set out in each award agreement.
See the table below for further detail on the terms of options issued under the 2019 Equity Incentive Plan in the year
to 30 June 2021.
64
FINEOS Corporation Holdings plc
Notes to the Consolidated Financial Statements (continued) Grant Date
No. of Share
Options
Exercise price per
option
Vesting conditions
Contractual life of
Options
Various grant dates
4,272,000 Range of AU$3.7546
to AU$4.4266
Three-year service
period.
Expire seven years
after date of grant
23 September 2020
280,355 Range of AU$0.35 to
AU$1.11
12 January 2021
39,945 AU$3.61
11 May 2021
700,000 AU$3.8968
Expire between six
and nine and a half
years from date of
grant.
Expire three years
after date of grant
Expire seven years
after date of grant
Service periods
ranging from one
month to three and a
half years at date of
grant. (Related to the
Limelight acquisition)
One-year service
period.
Options shall fully
vest in three equal
tranches on the 1st
year, 2nd year and
3rd year anniversary
from the date of
grant of the options.
(Related to the Spraoi
acquisition)
5,292,300
An expense of €2,129,018 was recognised during the financial year (2020: €386,370) relating to the current year
award of options under the 2019 Equity Incentive Plan.
2012 Share Option Plan, 2015 Share Option Plan and 2019 Share Option and Retention Plan
Prior to listing, FINEOS International Limited, the previous ultimate parent undertaking of the Group, operated a
2012 Share Option Plan and a 2015 Share Option Plan. The options awarded were subject to a three-year service
period and the occurrence of a ‘triggering event’, being the acquisition by any person, or group of persons acting in
concert (excluding any persons connected or related to the existing shareholders), of control of the Company as a
result of purchasing and/or subscribing for shares under a trade sale or IPO.
In February 2019, the Group modified the terms and conditions of the share options granted under its 2015 Share
Option Plan and granted new options under a 2019 Share Option and Retention Plan. The options granted under the
2019 Share Option and Retention Plan were issued as replacements for options granted under the Company’s 2012
Share Option Plan, which lapsed on 1 February 2019 without having vested.
On 24 June 2019, as part of the restructure, all options were exchanged for options in the new parent Company,
FINEOS Corporation Holdings Limited, on a one-for-one basis. The awards were to vest six months after listing.
These 2015 and 2019 share option plans have now closed, and no further awards were issued under these plans in
the current or prior financial year. An expense of €Nil was recognised during the financial year (2020: €1,887,685)
relating to the February 2019 modification of options under the 2015 Share Option Plan and the grant of options
under the 2019 Share Option Plan.
Details of movement and options outstanding under the Group’s Equity Incentive Plans
The following table illustrates the number and weighted average exercise prices (WAEP) of, and movements in, share
options granted under the schemes to Group employees during the year.
Annual Report 2021
65
2021
Number
2021
WAEP
2020
Number
2020
WAEP
Outstanding (1 July 2020: €0.001 per share;
1 July 2019: €0.01 per share)
Resolution to subdivide shares by 10
Options granted
Options exercised
Options forfeited
17,217,500
0.53
2,044,064
–
17,217,500
5,292,300
(5,072,870)
(1,221,708)
18,396,576
20,440,640
4,475,000
(7,648,140)
(50,000)
0.53
2.48
0.17
2.38
Outstanding at 30 June at €0.001 per share
16,215,222
1.17
17,217,500
Exercisable at 30 June at €0.001 per share
7,832,989
0.20
12,792,500
1.83
0.18
1.55
0.18
1.55
0.53
0.18
For the share options not yet exercisable as at 30 June 2021 the weighted average remaining contractual life is
1.75 years (30 June 2020: 2.5 years).
The fair value of equity-settled share options granted is estimated as at the date of grant using a Black-Scholes
model, taking into account the terms and conditions upon which the options were granted. The Black-Scholes
model is internationally recognised as being appropriate to value employee share schemes. The Company has used
expected share price volatilities of comparable listed companies.
The following table lists the inputs to the model used for the year ended 30 June 2021 (weighted average in each
case):
Dividend yield
Expected volatility
Risk free interest rate
Average expected life remaining in years
2021
%
0
45.10
0.60
4.4
2020
%
0
42.13
0.80
5
66
FINEOS Corporation Holdings plc
Notes to the Consolidated Financial Statements (continued) 20. Commitments and Contingencies
(a)
Capital commitments
At the year end the Group had no capital commitments.
(b)
Contingent liabilities
At the year end the Group had no contingent liabilities.
(c)
Lease commitments
The Group has total future minimum lease payments under non-cancellable lease commitments as follows:
At 30 June 2021
Due within one year
Due within two to five years
Due after five years
At 30 June 2020
Due within one year
Due within two to five years
Due after five years
Land and
buildings
€
Software
licences
€
Total
€
1,204,860
1,330,194
2,535,054
3,390,532
2,338,968
741,288
4,131,820
–
2,338,968
6,934,360
2,071,482
9,005,842
Land and
buildings
€
1,313,744
3,791,472
3,118,624
Software
licences
€
655,291
883,460
Total
€
1,969,035
4,674,932
–
3,118,624
8,223,840
1,538,751
9,762,591
Annual Report 2021
67
21.
Lease Liabilities
Group
Current lease liabilities
Non-current lease liabilities
Total lease liabilities
The Group’s total lease liability over the years are as follows:
Opening liability
Additions for the year
Disposals for the year
Interest for the year
Lease expense for the year
Closing lease liability
2021
€
2020
€
2,151,497
1,524,606
5,262,444
6,251,540
7,413,941
7,776,146
2021
€
2020
€
(7,776,146)
(7,021,186)
(1,568,915)
(2,335,075)
45,808
–
(476,627)
(507,917)
2,361,939
2,088,032
(7,413,941)
(7,776,146)
Short-term lease expenses in the statement of comprehensive income
–
–
The Group’s leases include rental of office spaces for business use and right-of-use licences. All leases are on a fixed
repayment basis and no arrangements have been entered into for contingent rental repayments. The lease terms
range from two to 15 years depending on the term set in the contract. The effective interest rate charged during the
financial year ranged from 3.2% to 7% (2020: 3.2% to 7%) per annum. The lower rate of 3.2% reflects the Group’s
overdraft facility rate and the higher rate of 7% reflects the borrowing rate on the loan drawn by the Group in 2017
and repaid in September 2019.
The right-of-use asset of licences is classified as ‘intangible assets’, while the right-of-use asset of office rentals is
classified as ‘property, plant and equipment’. The movement in the carrying amount of the right-of-use assets of the
Group at the start and end of each reporting period is disclosed in Notes 11 and 12.
22. Controlling Party
Michael Kelly is the ultimate controlling party of the FINEOS Group.
23.
Pension Commitments
The Group operates defined contribution pension schemes. The Group’s contributions are charged to the statement
of comprehensive income in the year to which they relate and amounted to €3,391,835 (2020: €2,839,647). An
amount of €538,444 was payable at the year end (2020: €368,211).
68
FINEOS Corporation Holdings plc
Notes to the Consolidated Financial Statements (continued) 24.
(i)
Financial Instruments
Liquidity risk
Liquidity risk refers to the risk that the Group encounters difficulties in meeting its short-term obligations. Liquidity
risk is managed by matching the payment and receipt cycle. The following table details the Group’s remaining
contractual maturity for its liabilities. The table has been drawn up based on contractual undiscounted cash flows of
financial instruments based on the earlier of the contractual date or when the Group is expected to receive or (pay).
The table includes both interest and principal cash flows.
30 June 2021
Group
Financial liabilities
Finance lease
Total
€
Within
1 year
€
Between
1 – 5 years
€
Over
5 years
€
29,211,899
29,211,899
–
–
7,413,941
2,151,497
3,169,144
2,093,300
Research and development tax credit
6,449,366
1,269,063
3,382,583
1,797,720
Contingent consideration
4,637,242
1,759,117
2,878,125
47,712,448
34,391,576
9,429,852
3,891,020
30 June 2020
Group
Financial liabilities
Finance lease
Total
€
Within
1 year
€
Between
1 – 5 years
€
Over
5 years
€
25,674,688
25,674,688
–
–
7,776,146
1,524,606
3,551,873
2,699,667
Research and development tax credit
7,238,345
1,282,910
3,675,490
2,279,945
40,689,179
28,482,204
7,227,363
4,979,612
Fair values
The fair value of a financial instrument is the price that would be received to sell an asset or paid to transfer a liability
in an orderly transaction between market participants at the measurement date.
Financial instruments whose carrying amounts approximate fair value
Management has determined that the carrying amounts of cash and bank balances, trade and other receivables and
trade and other payables reasonably approximate their fair values because these are mostly short-term in nature.
The fair values of other classes of financial assets and liabilities are disclosed in their respective notes to these
financial statements.
Annual Report 2021
69
The analysis of the carrying amounts of the financial instruments of the Group required under IFRS 9 Financial
Instruments is as set out below:
Financial assets that are debt instruments measured at amortised cost
Trade receivables
Cash and cash equivalents
Financial liabilities at amortised cost
Trade payables
Lease liabilities
Group
2021
€
Group
2020
€
22,249,112
17,566,095
13,998,945
39,831,380
3,289,594
2,504,346
7,413,941
7,776,146
The main risks arising from the Group’s financial instruments are credit risk, market risk, foreign currency risk,
interest rate risk and liquidity risk. The Board reviews and agrees policies for managing each of these risks and they
are summarised below:
(ii)
Credit risk
Credit risk is the potential financial loss resulting from the failure of a customer or counterparty to settle its financial
and contractual obligations to the Group, as and when they fall due.
The Group’s exposure to credit risk is mainly influenced by the individual characteristics of each customer. The Group
has established credit limits for each customer under which these customers are analysed for credit-worthiness
before the Group’s standard payment and delivery terms are offered. Most of the customers have been with the
Group for many years and losses have occurred infrequently. In most cases, the Group does not require collateral in
respect of trade and other receivables. The Group monitors their balances regularly.
Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. The Group
always recognises lifetime expected credit losses (‘ECL’) for trade receivables. The ECL on these financial assets are
estimated using a provision matrix as shown below, based on the Group’s historical credit loss experience, adjusted
for factors that are specific to the receivables, general economic conditions and an assessment of both the current as
well as the forecast direction of conditions at the reporting date, including time value of money where appropriate.
Expected credit losses analysis:
At 30 June 2021
Current
1 month
2 months
3 months 4+ months
Balance
Trade receivables as at 30 June
2021
Expected credit losses %
Loss allowance
12,728,346
4,353,461
3,573,807
1,715,669
(722) 22,370,561
0%
–
0%
–
1%
5%
10%
35,738
85,783
(72)
121,449
At 30 June 2020
Current
1 month
2 months
3 months 4+ months
Balance
Trade receivables as at 30 June
2020
Expected credit losses %
Loss allowance
9,296,686
5,867,591
1,315,239
1,139,313
19,316
17,638,145
0%
–
0%
–
1%
5%
13,152
56,966
10%
1,932
72,050
FINEOS has not noted a significant impact on its customer base due to COVID-19. The increase in the provisioning for
expected future credit losses is primarily driven by the increase in revenue.
70
FINEOS Corporation Holdings plc
Notes to the Consolidated Financial Statements (continued) (iii)
Market risk
Market risk is the risk that changes in market prices, such as interest rates and foreign exchange rates, will affect the
Group’s income. The objective of market risk management is to manage and control market risk exposures within
acceptable parameters, while optimising the return on risk.
(a)
Foreign currency risk
The Group’s foreign currency risk arises from sales and purchases denominated in foreign currencies, primarily the
United States dollar, Australian dollar and New Zealand dollar. During the year, the Group used foreign currency
forward exchange contracts to hedge its exposure; however at the year end the Group had no outstanding contracts
in place.
Sensitivity analysis
At 30 June 2021, if the foreign currencies strengthen or weaken 5% against the functional currencies, with all variables
held constant, the maximum adjustment to the pre-tax profit/loss of the Group, respectively, for the financial years
presented would have been as set out below:
NZ $
AU $
US $
CAN $
GBP £
PLN
2021
€
147,767
97,939
2020
€
407,543
152,402
2,166,724
1,214,584
266,401
78,380
246,329
92,008
(88,248)
(84,264)
2,668,963
2,028,602
5% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and
represents management’s assessment of the possible changes in foreign exchange rate.
(b)
Interest rate risk
There are no variable rate instruments on the balance sheet at 30 June 2021. The Group does not account for any
fixed rate financial liabilities at FVTPL, therefore a change in interest rates at the reporting date would not affect
profit or loss.
Fixed rate instruments – nominal amount
Financial liabilities
2021
€
–
2020
€
–
Annual Report 2021
71
25. Business Combinations
The acquisitions completed during the year ended 30 June 2021, together with the completion dates, are detailed
below; these transactions entailed the acquisition of an effective 100% stake in all cases:
Limelight Health Inc. (‘Limelight’) (14 August 2020)
DigIn Technologies LLC (‘Spraoi’) (11 May 2021)
The amounts recognised in respect of the identifiable assets acquired and liabilities assumed are as set out in the
table below.
ASSETS
Non-current assets
Property, plant and equipment
Identifiable intangible assets
Limelight
2021
€
Spraoi
2021
€
Total
2021
€
149,761
5,777
155,538
26,259,192
3,024,754
29,283,946
Total non-current assets
26,408,953
3,030,531
29,439,484
Current assets
Trade and other receivables (i)
Deferred tax asset
Cash and cash equivalents
2,466,143
-
347,764
1,438
2,813,907
1,438
13,184,041
211,253
13,395,294
Total current assets
15,650,184
560,455
16,210,639
LIABILITIES
Trade and other payables
Provision for deferred tax
(1,429,039)
(447,899)
(1,876,938)
(887,772)
–
(887,772)
Total liabilities
(2,316,811)
(447,899)
(2,764,710)
Total identifiable assets acquired and liabilities assumed
Goodwill arising on acquisition (ii)
39,742,326
36,828,359
3,143,087
4,612,692
42,885,413
41,441,051
Total consideration
76,570,685
7,755,779
84,326,464
Consideration satisfied by:
Cash payments
69,570,941
3,177,897
72,748,838
Issue of equity instruments (ordinary shares of the Company) (iii)
6,999,744
–
6,999,744
Accrued consideration on true-up
Contingent consideration (stated at net present cost) (Note 16)
–
–
130,349
130,349
4,447,533
4,447,533
Total consideration
76,570,685
7,755,779
84,326,464
Net cash outflow arising on acquisition
Cash consideration
Less: cash and cash equivalents acquired
69,570,941
3,177,897
72,748,838
(13,184,041)
(211,253)
(13,395,294)
Total outflow in the Condensed Consolidated Statement of Cash Flows
56,386,900
2,966,644
59,353,544
72
FINEOS Corporation Holdings plc
Notes to the Consolidated Financial Statements (continued) (i)
Trade and other receivables
Limelight
Spraoi
Total Group
Gross
contractual
value
2021
€
2,466,143
347,764
2,813,907
Loss
allowance
2021
€
–
–
–
Fair value
2021
€
2,466,143
347,764
2,813,907
(ii)
(iii)
The principal factor contributing to the recognition of goodwill on acquisitions entered into by the Group is
the realisation of cost savings and other synergies with existing entities in the Group which do not qualify
for separate recognition as intangible assets. The goodwill is not expected to be deductible for income tax
purposes.
The fair value of the 2,743,315 ordinary shares issued as part of the consideration paid for Limelight was
determined on the basis of a volume weighted average price per CDI on ASX for the 20 consecutive trading
days ending with the complete trading day five days prior to the acquisition closing date. The fair value of
the share consideration was determined on this basis to be AU$11,705,176 (AU$4.2688 per CDI). The value
of the shares issued as part consideration for Limelight in Note 17 of €7,149,946 represents the value of
the shares when translated to Euro at date of issue, 26 August 2020, when the AU$/EUR exchange rate was
1.6371. The difference has been recorded as a foreign exchange loss in the Income Statement.
Acquisition-related costs
Limelight
Spraoi
Total Group
2021
€
1,798,147
303,677
2,101,824
Acquisition-related costs, which exclude post-acquisition integration costs, are included in general and administration
costs in the consolidated statement of comprehensive income.
The post-acquisition impact of acquisitions completed during the year on the Group’s loss for the financial year was
as follows:
Revenue
Limelight
2021
€
Spraoi
2021
€
Total
2021
€
9,167,397
387,971
9,555,368
(Loss)/profit for the financial year before tax
(4,718,127)
12,835
(4,705,292)
The revenue and loss on ordinary activities before tax of the Group for the financial year determined in accordance
with IFRS as though the acquisitions effected during the year had been completed on the first day of the financial
year would have been as follows:
Revenue
2021
Acquisitions
€
FINEOS Group
excluding 2021
acquisitions
€
FINEOS Group
including 2021
acquisitions
€
15,184,733
98,783,267
113,968,000
Loss for the financial year before tax
(5,309,784)
(8,839,824)
(14,149,608)
Annual Report 2021
73
Related Party Transactions
26.
A Group subsidiary, FINEOS Corporation Limited (Ireland), is party to a lease arrangement with a company controlled
by Michael Kelly. Its term extends until 13 June 2029 with no express options for renewal in favour of either party.
The lease provides for a rent review on 13 June 2024 at market rates. Rent payable by FINEOS is currently €779,656
per annum (excluding taxes). The rental expense for the year was €779,656 (2020: €779,656). The total rent due at
30 June 2021 was €Nil (2020: €Nil).
Consulting fees invoiced by Non-executive Directors during the year amounted to €Nil (2020: €9,862).
In common with other companies, which are members of a group of companies, the financial statements reflect the
effect of such membership.
Key management personnel
All Directors of the FINEOS Group are considered key management personnel. The current Directors are set out on
page 6 of the Annual Report. Total remuneration in respect of these individuals is split as follows:
Wages and salaries
Employer’s PRSI
Pension
Shares allotted to Directors
Share-based payment expense
Share awards gain on exercise
2021
€
2020
€
1,169,025
1,226,598
40,690
42,597
–
25,752
44,375
41,207
24,510
–
3,319,860
921,117
4,597,924
2,257,807
During the financial year ended 30 June 2021, there were no material changes to, or material transactions between,
the Company and its key management personnel or members of their close family, other than in respect of
remuneration.
27. Capital Management Policies and Objectives
Capital management
The Group’s and Company’s objectives when managing capital are to safeguard the Group’s and Company’s ability
to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and
to maintain an optimal capital structure to reduce the cost of capital. The capital structure of the Group consists of
debts, which includes any borrowings, and equity attributable to owners of the Company, comprising issued capital
and reserves.
There were no changes in the Group’s and Company’s approach to capital management during the year. The Group
and Company monitor capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total
equity. Net debt is calculated as total borrowings (including bank borrowings and excluding trade and other payables,
provisions for income tax and deferred tax liabilities as shown in the statement of financial position) less cash.
Given that all of the Group’s external borrowings were repaid during the previous year, the gearing ratio has been
reflected as nil.
74
FINEOS Corporation Holdings plc
Notes to the Consolidated Financial Statements (continued) The gearing ratio of the Group at 30 June 2021 was as follows:
Total borrowings
Less: cash and cash equivalents
Net funds
Total equity
Total capital
Gearing ratio
Group
2021
€
–
Group
2020
€
–
(13,998,945)
(39,831,380)
(13,998,945)
(39,831,380)
136,340,578
83,181,856
136,340,578
83,181,856
Nil
Nil
28.
Subsidiary Undertakings
The Company has the following subsidiary undertakings. All subsidiaries are wholly owned unless otherwise
indicated:
Subsidiary Undertaking
FINEOS International Ltd
FINEOS Europe Unlimited
Country of
Incorporation
Jersey
Jersey
Principal Activity
Holding Company
Holding Company
Republic of Ireland
Innovator of enterprise claims management
and policy administration software
FINEOS Corporation Limited (previously
FINEOS Corporation U.C.)
FINEOS UK Limited (previously FINEOS
Corporation Limited)
FINEOS Corporation
United Kingdom
United States of
America
FINEOS Australia Pty Limited
Australia
FINEOS New Zealand Limited
New Zealand
FINEOS Polska S.p Z.o.o
FINEOS Canada Limited
Poland
Canada
FINEOS Hong Kong Limited
Hong Kong
FINEOS Esp Entity, S.L.U
Spain
Limelight Health Inc.
DigIn Technologies LLC
United States of
America
United States of
America
Provision of professional services to its parent
undertaking
Provision of professional services and
sales and marketing services to its parent
undertaking
Provision of professional services and
sales and marketing services to its parent
undertaking
Provision of professional services to its parent
undertaking
Provision of product engineering services to
its parent undertaking
Provision of professional services to its parent
undertaking
Provision of sales and marketing services to
its parent undertaking
Provision of product engineering services to
its parent undertaking
Provision of professional services and
sales and marketing services to its parent
undertaking
Provision of professional services and
sales and marketing services to its parent
undertaking
Spraoi Software Development Services
Private Limited
India
Provision of product engineering services to
its parent undertaking
Annual Report 2021
75
Details of registered offices are listed below:
Incorporated in Jersey
FINEOS International Ltd
FINEOS Europe Unlimited
Incorporated in Ireland
FINEOS Corporation Limited
Registered Address
2nd Floor, The Le Gallais Building,
54 Bath Street, St. Helier,
Jersey JE1 1FW
Registered Address
FINEOS House,
East Point Business Park,
Dublin 3, D03 FT97
Incorporated in United Kingdom
Registered Address
FINEOS UK Limited
5 Clapham Chase, Bedford,
Bedfordshire, MK41 6FA
Incorporated in United States of America
Registered Address
FINEOS Corporation
Limelight Health Inc.
DigIn Technologies LLC
Incorporated in Australia
FINEOS Australia Pty Limited
Incorporated in New Zealand
FINEOS New Zealand Limited
Incorporated in Poland
FINEOS Polska S.p Z.o.o
Incorporated in Canada
FINEOS Canada Limited
Incorporated in Hong Kong
FINEOS Hong Kong Limited
Incorporated in Spain
FINEOS Esp Entity, S.L.U
Incorporated in India
60 State Street, Suite 700,
Boston, MA 02109
26 O’Farrell Street, Suite 410, San Francisco,
CA 94108
326 Ardmore Avenue, Ardmore, PA 19003
Registered Address
Level 8, 224–228 Queen Street, Melbourne,
VIC 3000
Registered Address
Offices of DLA Phillips Fox,
Level 22, DLA Phillips Fox Tower,
209 Queen Street, Auckland 1010
Registered Address
ul. Cypriana Kamila Norwida 2, 80-280 Gdansk
Registered Address
900-1959 Upper Water Street,
Halifax, NS, B3J 3N2
Registered Address
16th floor, Wing On Centre,
111 Connaught Road Central
Registered Address
Calle Principe de Vergara 112,
28002 Madrid
Registered Address
Spraoi Software Development Services Private Limited
23, Siva Archade, 29th Main, BTM Layout 1st Stage,
Bangalore KA 560068
76
FINEOS Corporation Holdings plc
Notes to the Consolidated Financial Statements (continued)
29.
Events Subsequent to the Year End
There are no events subsequent to the year end that would require disclosure in or adjustment to the consolidated
financial statements.
30.
Prior Year Comparatives
Costs have been reclassified in the comparative year ended 30 June 2020 to ensure comparability.
The reclassifications have had no impact on operating profit or loss on ordinary activities before tax in the comparative year.
31. Approval of Consolidated Financial Statements
The consolidated financial statements and Company statement of financial position in respect of the year ended
30 June 2021 were approved and authorised for issue by the Directors on 25 August 2021.
Annual Report 2021
77
Information required by ASX Listing Rules and not disclosed elsewhere in this document is set out below.
Information is correct as at 19 August 2021, unless otherwise indicated.
(1)
(2)
There are 301,676,608 CHESS Depositary Interests (CDIs) on issue.
The number of securities held by substantial shareholders are set out below:
JACQUEL INVESTMENTS LIMITED
(3)
FINEOS has issued the following securities:
(a)
(b)
301,683,588 CDIs held by 3,879 CDI holders; and
16,254,165 unquoted options held by 639 option holders.
(4)
Voting Rights:
Balance as at
19 August
2021
162,333,430
%
53.8%
Since Chess Deposit Nominees Pty Limited (CDN) is the legal holder of applicable shares but the holders of CDIs are
not themselves the legal holders of their applicable shares, the holders of CDIs do not have any directly enforceable
right to vote under the FINEOS constitution.
In order to vote at general meetings, CDI holders have the following options:
(a)
(b)
(c)
instructing CDN, as the legal owner of the underlying shares, to vote the shares underlying their
CDIs in a particular manner;
informing FINEOS that they wish to nominate themselves or another person to be appointed as
CDN’s proxy with respect to the shares underlying their CDIs for the purposes of attending and
voting at the general meeting; or
converting their CDIs into a holding of shares and voting these at the meeting (however, if thereafter
the former CDI holder wishes to sell their investment on ASX it would be necessary to convert the
shares back to CDIs).
Option holders are not afforded any voting rights by the options held by them.
(5)
Distribution of Security Holders
Distribution spread of Security Holdings as at 19 August 2021
Holding Ranges
1-1,000
1,001-5,000
5,001-10,000
10,001-100,000
100,001-9,999,999,999
Totals
Holders
Total Units
2,225
1,128
252
241
33
958,218
2,750,026
1,819,294
5,828,170
290,327,880
3,879
301,683,588
%
0.32
0.91
0.60
1.93
96.24
100.00
(6)
Unmarketable Parcels of Shares
Unmarketable Parcels (UMP) as at 19 August 2021 (based on a share price of $3.50)
Total Securities/Issued Capital
UMP Securities
UMP Holders
UMP Percent
301,683,588
332,709
1,382
0.11028
78
FINEOS Corporation Holdings plc
Additional Security Holder Information
(7)
Top 20 Security Holders
JACQUEL INVESTMENTS LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
CITICORP NOMINEES PTY LIMITED
BNP PARIBAS NOMINEES PTY LTD
CARMEN INVESTMENTS LIMITED
AUSTRALIAN FOUNDATION INVESTMENT COMPANY LIMITED
BNP PARIBAS NOMS PTY LTD
CS THIRD NOMINEES PTY LIMITED
NATIONAL NOMINEES LIMITED
MIRRABOOKA INVESTMENTS LIMITED
AMCIL LIMITED
DJERRIWARRH INVESTMENTS LIMITED
JASON ANDREW & WENDY ANDREW
POWERWRAP LIMITED
TRUEBELL CAPITAL PTY LTD
GARRETT VIGGERS
ALAN LEARD
BNP PARIBAS NOMINEES PTY LTD HUB24 CUSTODIAL SERV LTD
HIGHSCALE VENTURES CLASSIC FUND LLC
Balance as at
19 August
2021
162,333,430
38,917,454
23,108,431
15,845,024
8,891,152
8,009,040
7,338,177
4,786,208
4,140,324
3,842,216
3,424,380
2,262,763
1,105,000
986,825
784,471
761,024
609,509
435,364
402,202
365,603
%
53.8%
12.9%
7.7%
5.3%
2.9%
2.7%
2.4%
1.6%
1.4%
1.3%
1.1%
0.8%
0.4%
0.3%
0.3%
0.3%
0.2%
0.1%
0.1%
0.1%
Total Securities of Top 20 Holdings
Total of Securities
288,348,597
301,683,588
95.7%
(8)
(9)
FINEOS’ securities are listed on the ASX and are not listed on any other securities exchange.
Securities subject to Voluntary Escrow
The following securities are subject to voluntary escrow:
(a)
(b)
81,166,715 securities on escrow on behalf of Jacquel Investments Limited; and
4,004,520 securities on escrow on behalf of Carmen Investments Limited,
until FINEOS releases its financial results for the financial year ended 30 June 2021 to the ASX.
(10)
During the financial year ended 30 June 2021, the Company has used its cash and assets readily convertible
to cash that it had at the time of ASX admission in a way consistent with its business objectives set out in
the prospectus dated 26 July 2019.
(11)
FINEOS is incorporated in Dublin, Ireland.
Annual Report 2021
79
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80
FINEOS Corporation Holdings plc
Company Information
Directors
Anne O’Driscoll (Chairman)
Michael Kelly
Gilles Biscay
Martin Fahy
David Hollander
Tom Wall
Company Secretary - Joint
Tom Wall
Company Secretary - Joint
Vanessa Chidrawi
Registered Office
FINEOS House,
East Point Business Park,
Dublin 3, Ireland
Level 8, 224-228 Queen Street,
Melbourne, VIC 3000
Australia
Ph: +61 3 9018 3400
Registered Number
639640
Solicitors
William Fry
2 Grand Canal Square,
Dublin 2, Ireland
Bankers
Bank of Ireland
Lower Baggot Street,
Dublin 2, Ireland
HSBC Bank
1 Grand Canal Square,
Dublin 2, Ireland
Auditors
Mazars
Chartered Accountants and Statutory Audit Firm
Harcourt Centre,
Block 3,
Harcourt Road,
Dublin 2, Ireland
Share Registry
Boardroom Pty Ltd
GPO Box 3993,
Sydney, NSW 2001
Australia
Ph: +61 2 9290 9600
Annual Report 2021
81