(1) Non-Current Assets
The development of the individual items of intangible assets and property, plant and equipment is shown in the following table (all figures in kEUR):
EUR 1,348 of the additions to cost were of a non-cash nature in the fiscal year 2006/2007 (prior year: kEUR 2,400).
(3) Trade Receivables
The Company concluded a credit insurance agreement that secures bad debts by up to 70% for named customers and by up to 65% for customers not named individually, provided that the receivables are recognized by the customers.
(4) Other Financial Assets
Other financial assets solely comprise fixed-term deposits at different banks with original terms of six to twelve months that are held to maturity. The weighted remaining term of the fixed-term deposits amounts to approx. three months as of September 30, 2007.
The fixed-term deposits are subject to variable interest rates according to the agreed term (credit interest rate of between 2.9% and 4.6%). The corresponding interest income is posted to income on a monthly basis.
kEUR 1,452 of the fixed-term deposits is pledged in favor of the sellers of the shares in Xara. The addition to the pledged fixed-term deposits is reported under cash paid for the acquisition and stepping up of shares in subsidiaries in the consolidated cash flow statement. The further additions to the fixed-term deposits that are not pledged are reported under cash paid for investments in other financial assets in the consolidated cash flow statement.
(5) Cash and Cash Equivalents
Bank balances earn interest at the variable rates for on demand deposits. Short-term deposits in fiscal year 2007/2007 were made for different periods of between one day and three months depending on the respective liquidity requirements of the Group. These are subject to interest at the respective interest rates applicable for short-term deposits.
(6) Equity
The issued capital of MAGIX AG amounts to kEUR 12,662 as of September 30, 2007 and is divided into 12,662,038 no par value shares with an imputed nominal value of kEUR 1.00 per share.
IPO in April 2006
A resolution was passed at the shareholders’ meeting of MAGIX AG on March 22, 2006 to increase the issued capital of the Company by kEUR 1,350,000.00 by issue of 1,350,000 new registered shares with an imputed share in issued capital of kEUR 1.00 per share in return for a cash contribution and precluding existing shareholders’ subscription rights.
The capital increase was filed in the commercial register after payment of the cash contributions in connection with the IPO of MAGIX AG on April 5, 2006. A premium of kEUR 15.40 per share applied to the shares issued at an issue price of kEUR 16.40 per share for the IPO, i.e. a total of kEUR 20,790. The premium was added to the capital reserve. Costs of kEUR 1,531 were incurred as a direct result of the IPO (after taking tax effects of kEUR 941 into account) that were offset against the premium.
Authorized Capital
By resolution dated March 22, 2006, the shareholders’ meeting of the Company authorized the management board to increase the issued capital of the Company in the period up until March 22, 2011, once or several times, subject to the approval of the Supervisory Board, in return for cash contributions or contributions in kind by up to a total of kEUR 6,331,019.00 by issue of new registered shares with an imputed share in the issued capital of kEUR 1.00 per share. This authorization takes effect upon filing in the commercial register. Once the entry is made in the commercial register, the management board is also authorized, subject to the approval of the Supervisory Board, to decide to preclude the statutory subscription rights of the shareholders. However, subscription rights can only be precluded
- to offset fractional amounts,
- if the issue price of the new share is not substantially below the stock exchange price and the shares issued under preclusion of the subscription right pursuant to Sec. 186 (3) AktG [“Aktiengesetz”: German Stock Corporation Act] do not exceed a total of 10% of the issued capital,
- to issue shares to persons that are employed by the Company or one of its affiliated entities, and
- to obtain contributions in kind, in particular in the form of equity investments, entities or parts of entities.
The management board was also authorized at the shareholders’ meeting to determine the further content of the share rights and the conditions of share issue with the approval of the Supervisory Board.
Conditional Capital
A resolution was passed at the shareholders’ meeting on January 19, 2006 to increase the issued capital of the Company conditionally by up to kEUR 700,000.00 by the issue of new shares, namely by issuing up to 700,000 registered shares with an imputed share in issued capital of kEUR 1.00 each. The conditional capital increase serves solely to grant up to 700,000 subscription rights (stock options) to members of the management board of the Company and to employees of the Company as well as to managing directors and employees of group entities pursuant to the authorization for the “stock option plan 2006” passed at the shareholders’ meeting on January 19, 2006. 392,500 stock options were issued under this stock option plan up until the cut-off date of these financial statements, with 76,000 relating to the fiscal year 2006/2007. Of this figure, 17,500 stock options subsequently lapsed due to employees leaving the company. As a result there are currently 375,000 options.
Share Repurchase
The shareholders’ meeting on March 23, 2007 authorized the Company to purchase shares in MAGIX AG subject to the approval of the Supervisory Board. The authorization is limited to the purchase of treasury shares with an imputed share in issued capital of up to a total of kEUR 1,266,203.00, almost 10% of the issued capital of kEUR 12,662,038.00 as of September 30, 2006. This authorization can be carried out once or several times, in full or in parts. The authorization expires on August 31, 2008. The purchase is made via the stock exchange or using a public repurchase bid.
The shareholders’ meeting on March 23, 2007 also authorized the management board to sell the treasury shares back to the Company again via the stock exchange, subject to the approval of the Supervisory Board. The shares can also be used or redeemed for the stock option plan or as acquisition currency.
The Company made use of the authorization in the fiscal year 2006/2007 and acquired a total of 165,394 treasury shares for a total cost of kEUR 1,110. A total of 139,000 of the treasury shares purchased were transferred to the former minority stakeholders in m2any GmbH for the acquisition of the minority interests in m2any GmbH.
The remaining 26,394 treasury shares are reported as an adjustment to equity in a separate item and measured at an average cost of kEUR 6.71 per share.
(7) Provisions
The table below shows the development of the provisions:
The provisions relate to obligations to pay royalties for software from third parties that is used in products of the MAGIX Group. Provisions for royalties payable are based on the sales revenue recognized by the MAGIX Group. One license holder has raised claims to royalties for past license periods although the legal basis is disputed and has not been resolved in full to date. If the license holder in question succeeds with the claims, the provision will be partly utilized to settle them.
The provision for bonuses/vouchers is set up on the basis of the estimated annual performance of individual sales partners as well as the estimated sale of vouchers to end customers.
The provisions for legal counsel relate to financial risks from litigation as well as the related legal advice.
The provisions contain current portions only.