Myriad Group Annual Report 2009

Annual Report 2009

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Myriad and certain other trade names, trademarks and logos are trademarks or registered trademarks of Myriad Group AG. All other trademarks, logos or source marks are the property of their respective owners. All rights reserved. Copyright © Myriad Group AG 2010.

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About MyriadMyriad Group AG is a global leader in mobile technology and has shipped over 3.2 billion software applications in more than 2 billion

mobile phones. Its comprehensive portfolio includes browsers, messaging, Java, social networking, user interfaces and middleware for

all types of mobile phones, from ultra-low cost handsets to advanced smartphones.

The company provides both individual components and complete solutions, which enable handset manufacturers and operators to

deliver amazing experiences on mobile phones.

Myriad also develops USSD-based customer self-care platforms that deliver over 10 billion messages a year to 220 million mobile users

across more than 30 mobile operators worldwide.

Myriad was created from the combination of industry-leading companies, Esmertec and Purple Labs. It operates worldwide, with

offices in Switzerland, France, UK, USA, Mexico, China, South Korea, Taiwan, Japan and Australia. Headquartered in Dübendorf-Zürich

Switzerland, Myriad is listed on the SIX Swiss Exchange (SIX Symbol: MYRN). For more information, visit www.myriadgroup.com

Myriad Group AG

Lagerstrasse 14

8600 Dübendorf

SWITZERLAND

t: +41 (0) 44 823 89 00

f: +41 (0) 44 823 89 99

e: [email protected]

www.myriadgroup.com

Myriad Group AG

p.1

Contents

Business Report 2009 3

Facts & figures 2009 4

Letter to shareholders 5

Business description 8

Corporate Governance 2009 13

Corporate governance report 2009 14

Financial Report 2009 35

Management discussion and analysis of results 36

Consolidated financial statements 40

Notes to the consolidated financial statements 45

Report regarding the Consolidated Accounts 2009 92

Statutory financial statements 94

Notes to the statutory financial statements 97

Proposal by the Board of Directors 104

Report to the Statutory Financial Statements 2009 105

Additional Information 107

Information for investors 108

Contact information 108

p.2

we make the complex incredibly easy

p.3

Business Report 2009

p.4 Facts & figures 2009

Facts & figures 20091

Revenue USD 125.8m

+205% from USD 41.3m in FY08

Gross profit USD 86.4m

+279% from USD 22.8m in FY08

EBITDA2 USD 25.0m

USD 2.5m in FY08

EBIT USD -48.1m

USD -3.8m in FY08

EBIT without exceptional charges USD -3.3m

USD -3.3m in FY08

Net result USD -51.4m

USD -7.7m in FY08

EPS USD -1.35

USD -0.37 in FY08

Operating cash flow USD 24.0m

USD 0.9m in FY08

Cash & cash equivalents USD 33.2m

USD 3.3m at Dec 31, 2008

Shareholders’ equity USD 96.6m

USD 55.8m at Dec 31, 2008

Equity ratio: 56.2%

65.4% at Dec 31, 2008

Total headcount at year end 778

405 in FY08

Sales breakdown per segment Sales breakdown by typein 2009 (million USD) in 2009 (million USD)

DeviceSolutionsDivision Licence

MobileServicesDivision Service

112.8 71.7

13.0

54.1

Footnote 1 2009 results are shown on a pro forma basis, as if Myriad’s acquisition of Purple Labs had closed on January 1, 2009. Myriad management

believes that pro forma financial information provides more meaningful period-to-period comparisons of its performance, since under IFRS, the results of Purple Labs are only consolidated from April 1, 2009.

2 EBITDA before restructuring charges.

Shareholder letter p.5

Dear shareholders,2009 – The year we began our mission to build the world’s leading independent provider of mobile software

We are pleased to announce that 2009 was a year of important achievements for Myriad Group AG.

Against a backdrop of global economic turmoil, Myriad emerged as a scale business capable of

competing on the world stage. Through the combination of the former Esmertec and Purple Labs

businesses, a leading organisation with a rich mobile heritage and engineering expertise was

created. Serving the biggest brands in the mobile handset industry that account for over 70% of

worldwide production as well as over 30 of the world’s largest mobile network operators, Myriad’s

blue chip customer base provides both stability of existing revenues as well as the potential for

significant future growth.

The year in review

In creating an industry leader we have recognised the importance of attracting the best talent

to lead the change. Myriad has strengthened the organisation from the Executive Management

(with the appointments of a new CTO, CPO and CFO) through to the Engineering, Sales and Back

Office functions, by hiring individuals with strong industry expertise, who are able to quickly add

value to our business.

As a software developer we recognise our long term success and competitive differentiation

will depend upon creating innovative new products. Building on our existing market leadership,

with over 3.2 billon units of software installed in over 2 billion mobile phones, in 2009 we invested

over USD 39 million in Research & Development to expand our portfolio and deliver long term,

sustainable growth. Notably, we opened a new office in Chengdu to increase the number of

engineers based in China going forward, and facilitate management’s strategy to reduce the cost

of innovation across the Group. We also consolidated a number of offices to continue our cost

reduction programme.

We have leveraged our history of innovation with the introduction of several new products.

Technologies now owned by Myriad are responsible for some of the industry’s “Market Firsts“

or major turning points; in 2009 we have harnessed this deep expertise across the company

by consistently delivering innovation for today’s marketplace. In September, we announced the

world’s first widgets (Graphical User Interface) for ultra-low cost phones. This breakthrough will

change how people in developing countries experience the internet, for the first time, on phones

they can afford.

In February 2010, we announced Myriad Dalvik Turbo for Android phones; this new product gives

a boost by running three times faster than Google’s own version of the software, offering new

possibilities to all the players in the Android ecosystem.

Innovation can take many forms, and Myriad was recognised for an innovative approach using

existing technology as a Finalist at the GSMA Mobile Awards. In a joint nomination with our

customer Telefonica Mexico, for “Best Use of Mobile for Social & Economic Development”, the

Myriad team helped set up the world’s largest mobile health survey to track the spread of the H1N1

(Swine Flu) pandemic, using our market-leading USSD software.

In September we acquired a mobile social networking business, Xumii. Xumii offers Myriad the

potential to develop next generation messaging solutions which integrate social networks with

instant messaging and address books as well as leveraging ‘cloud computing’ architecture to

enable users to access their contacts on multiple social networks concurrently. This solution is

valuable to both Myriad’s Mobile Handset as well as Network Operator customers.

p.6 Shareholder letter

We established a number of key partnerships. With Qualcomm, the leading provider of wireless

technologies, we were chosen to port our mobile applications onto their Brew Mobile Platform

enabling reduced time to market for Original Equipment Manufacturers (“OEM’s”) and an

expansion of our sales distribution. LGE chose Myriad as its major partner for its first Android

device, recognising Myriad’s expertise as a founding member of the Open Handset Alliance. In

the Mobile Services Division, Myriad was selected by T-Mobile to provide its USSD (customer care)

solution to its Czech subsidiary.

Positive progress was made with our largest customer SAGEM Wireless, including the delivery

of a complete software suite powering their latest phone, designed for sportswear brand Puma.

The device is to be launched in time for the Football World Cup in South Africa in 2010. Following

the phone’s launch at the Mobile World Congress (“MWC”) in Barcelona in February 2010, the

device received considerable positive press and analyst coverage and there appears to be strong

demand from major network operators.

We completed the integration of the businesses in 2009. This was essential to providing a

seamless service to customers, many of whom were served by both of the former companies.

This has led to an improvement in underlying EBITDA profitability, reflecting elimination of

duplicated activities such as sales and marketing teams as well as a number of sales wins where

we have been able to cross-sell products to existing customers. We are looking to drive further

rationalisation and streamlining of activities in 2010 as we strive to improve our cost efficiency.

Our ability to deliver the integration of the two businesses quickly and efficiently provides

evidence of the skills needed to integrate future potential acquisitions. With the maturing of the

mobile handset segment, similar to other consumer electronics markets, we believe the industry

is ripe for consolidation. As such Myriad is well placed to drive this consolidation to supplement

organic growth and ultimately strengthen category leadership.

We achieved our pro forma annual revenue guidance target of USD 125 million for 2009 that we

set in February last year. Despite tough market conditions this demonstrated the resilience and

sustainability of our revenues as well as the quality of support from both our existing customers

and new customers.

We have been pleased with the strength of the merged balance sheet with over USD 29 million

of net cash. This reflects strong cash and working capital practices. This liquidity provides us with

a strong base from which to fund both organic growth as well as to form part of the consideration

for potential acquisitions.

The year ahead

With the global economy appearing to be recovering from the effects of the 2008/9 downturn,

we believe growth in demand for mobile handsets and associated services will return, leading to

resumption of investment by Mobile Network Operators following tightening of their spend in the

last two years.

In 2010 we have set three primary objectives:

Product deliveryFirstly we want to focus on our product delivery targets to ensure that the investment in 2009, and

that planned for 2010, results in the new generation of products we believe our customers demand.

Since time to market on revenues is relatively slow in the embedded software space, growth in

2010 will be modest. However, we expect significant growth to result in 2011 onwards once the new

devices containing Myriad’s next generation of software solutions begin to ship in volume.

Shareholder letter p.7

SAGEM Wireless renewalSecondly we will seek to work with Sagem Wireless to secure renewal contracts to replace the

existing arrangements which reach completion in December 2011. This will enable us to effectively

manage resources through 2011 and beyond. Whilst the outlook appears positive for Sagem

Wireless, we do not expect the level of renewal income to be at current levels and hence our focus

to contractually secure post 2011 business is of utmost importance.

Driving economies through consolidation and simplificationThirdly we will look to drive further efficiency by simplifying and streamlining our business as well

as continuing to look for new M&A opportunities to leverage our significant economies of scale.

Despite a solid integration of the existing business we recognise there are further steps we can

take to improve efficiency and drive performance. Following a transition year in 2009, 2010 will be

a year in which management focus on driving core performance.

The business has achieved much in a relatively short period of time. This would not have been

possible without the hard work and commitment of all our teams around the world. On behalf

of the entire Board of Directors and the Senior Management team, we would like to take this

opportunity to thank our Myriad colleagues. We also thank our customers for their loyalty and

business and we thank you, our shareholders, for your interest and loyalty in our company.

We look forward as one team in the coming year to continue to earn your trust and respect as

we look to take the next steps in achieving our mission of making Myriad the world’s leading

independent provider of mobile software.

Sincerely,

Rolf P. Jetzer Simon Wilkinson

Chairman Chief Executive Officer

p.8 Business description

Business descriptionMyriad Group AG is a global leader in mobile technology providing software solutions and

services to the mobile and consumer electronic industries. Our Group has extensive experience

in developing, integrating, testing, optimising and maintaining mobile software applications,

platforms and solutions. With over 700 engineers across the business Myriad has deep expertise

in software and mobile telecommunications.

Being close to our customers

Our offices across the world are located at close proximity to our customers who are the major

handset brands in the mobile industry and some of the world’s largest mobile network operators.

Our software engineers develop innovative software that helps our customers to differentiate

their offerings. Professional services is a key part of our value proposition.

Myriad was created from the combination of two industry-leading companies, Esmertec and

Purple Labs, in 2009. Our global operations span across four continents and we have headcount

of 778 worldwide. The Group is headquartered in Dübendorf-Zurich Switzerland and is listed on

the SIX Swiss Exchange.

Myriad’s broad product portfolio includes:

Java engines•

Web/wap browsers•

Messaging applications•

Android platform•

Complete software platforms for both 2G and 3G devices•

USSD-based mobile service platforms•

Mobile social networking platforms•

The Group is organised into two divisions comprising the ‘Device Solutions Division’ (DSD) and the

‘Mobile Services Division’ (MSD).

Business description p.9

Device Solutions Division

DSD sells licences and services to mobile device manufacturers, design houses, chipset and

component vendors which account for over 70% of worldwide handset shipments along with

a small number of Mobile Network Operators.

Software licences are sold either as fixed-term licences or on a pay-per-unit shipment royalty

basis. Typically customers will purchase services with licences to enable integration, porting and

testing of software. As such, service gross margins are high, reflecting a premium for engineering

expertise associated with the software. Services are billed either on a fixed fee or daily rate basis.

In addition, many customers purchase ongoing support and maintenance services on an annual

fixed fee basis providing significant recurring revenues.

Dynamic HomescreenThe world’s first widget suite, (Graphical User

Interface) for ultra-low cost phones. Mobile

Widgets are becoming a key differentiator

not only for smart phones, but also for mass-

market handsets. Myriad Dynamic Homescreen

provides ready-made essential widgets for the

delivery of networked information to ultra-low

cost handsets.

Puma PhoneThe Puma Phone, launched at MWC 2010 by

Sagem Wireless and sports brand Puma, is one

example of Myriad Application Environment

bringing iPhone-like user experience to 3G

entry-level mobile handsets. The Myriad

Application Environment, a complete software

suite for mass-market phones, has been

specifically designed for the current market of

RTOS-based devices and its challenges: cost,

performance and time to market.

Dalvik TurboIn February 2010, we announced Myriad Dalvik

Turbo for Android phones. Dalvik Turbo is a

direct “plug and play” replacement for the

Dalvik Virtual Machine engine that powers

Android. Created by Myriad engineering teams,

Dalvik Turbo boosts performance by running

three times faster than the Dalvik, offering

new possibilities to all the players in the

Android ecosystem.

MTKMyriad expertise for embedded software goes

beyond software for mobile phones, and since

2007, Myriad and MediaTek have collaborated to

offer game-changing technologies for the Blu-

ray industry, growing MediaTek market share by

almost 30% in just a few years. MediaTek use

Myriad Jbed Advanced CDC technology in its

leading MT8520 powered Blu-ray™ Player.

p.10 Business description

Mobile Services Division

MSD provides licences and services to over 30 Mobile Network Operators globally. The majority

of existing revenues relate to the USSD-based ‘Self Service Customer Care’ solution. This solution

enables Mobile Network Operators (“MNO’s”) to significantly reduce the cost of end-user customer

services such as mobile ‘top up’ through automation of the service provision.

MNO’s pay a capacity-based ‘Platform Licence fee’ along with deployment service fees billed on

a daily rate basis. Once installed, customers will pay ongoing support and maintenance fees on an

annual basis along with additional licence fees for capacity upgrades. Following the acquisition of

Xumii in 2009, Myriad expects revenues from deployment of the new Mobile Social Networking

solution to MNO’s to grow significantly, reflecting the trend of mobilisation of social networks such

as Facebook and Twitter.

XumiiMyriad Xumii Social Networking portfolio

offers customers the potential to develop

next generation messaging solutions which

integrate social networks with instant

messaging and address books as well as

leveraging ‘cloud computing’ architecture.

Social networking solutions are valuable

to both Myriad’s Mobile Handset as well as

Network Operator customers.

Self Service Access solutions (USSD & MAX)

These services enable operators to provide

added value services while reducing operational

costs. They can be simple text based services

(USSD) or more sophisticated graphical

interfaces (MAX), and have the advantage of

working on any GSM phone. Some examples

from the portfolio detailed balance inquiries,

top-up, Please Call Me, entertainment, content

downloads and mobile payment.

Myriad’s USSD service powered the world’s

largest mobile health survey, for which

Telefonica Mexico and Myriad were nominated

at this year’s prestigious Global Mobile Awards

in the “Best Use of Mobile for Social & Economic

Development“ category.

p.12

we are quick thinking and fast moving

p.13

Corporate Governance 2009

p.14 Corporate governance

Corporate Governance Report 2009Myriad Group AG (the “Company”, together with its subsidiaries “Group”, “Myriad” or “Myriad

Group”) is committed to meeting the high standards of corporate governance that seek to balance

transparency, entrepreneurship and control whilst ensuring efficient decision-making processes in

view of shareholders’ interests.

This report explains how management and control of the Company are organised and provides

background information on its corporate bodies and officers as of December 31, 2009.

The following information complies with the SIX Swiss Exchange Directive on Information Relating

to Corporate Governance (“Directive Corporate Governance, DCG”). Certain key elements

and information are contained in the Company’s Articles of Incorporation and Organisational

Regulations1. In cases where required information is provided in other sections of this Annual

Report, reference is made to the appropriate notes or page number(s).

1. Group structure and shareholders

Group structure

The organisational structure of the Group as of December 31, 2009:

Listed companiesMyriad Group AG (formerly Esmertec AG), incorporated in 1999 as a joint-stock company, is

domiciled at Lagerstrasse 14, 8600 Dübendorf, Switzerland. The registered shares of the Company

are listed on the Main Standard of SIX Swiss Exchange (Ticker symbol: MYRN; Swiss Securities

Number: 1,962,480; ISIN Number: CH0019624805). The market capitalisation amounted to CHF

214.33 million as of December 31, 2009. The Company held 20 of its own shares as of December

31, 2009.

1 Current versions are displayed on www.myriadgroup.com – the direct links for the documents are mentioned in section “9. Information policy” of this Corporate Governance Report.

Board of DirectorsChairman Rolf Jetzer

Chief Executive Officer

Simon Wilkinson


headed by Simon Wilkinson

Mobile Services Division

headed by Steve Langkamp

SVP Sales of Device Solutions & General Manager

AsiaGordon Tsang

Chief Commercial Officer

Steve Langkamp

Chief Product Officer

Malcolm Dawe

Chief Technology Officer

Benoit Schillings

Chief Financial Officer

James Bodha

Corporate governance p.15

Non-listed companiesFor a table of the operational non-listed consolidated entities please refer to Note 1 of the

consolidated financial statements of this Annual Report.

Significant shareholders

Pursuant to the information provided to the Company by its shareholders in compliance with the

Swiss Stock Exchange Act during 2009, the following shareholders held more than 3% of the

share capital:

Name of shareholder Percentage held1 Including shares from earn-out clause1

Earlybird Verwaltungs GmbH, DE-Munich2 13.4% 1.9%

Partners Group Holding AG, CH-Baar3 16.8% 2.1%

Sagem Telecommunications SA, FR-Paris 7.0% 0.5%

Sofinnova Partners SA, FR-Paris4 31.5% 3.8%

As a result of the capital increase on April 17, 2009, the Company disclosed the new percentages

of shareholdings of its significant shareholders in the prospectus dated April 30, 2009. The capital

increase triggered disclosure notices by the four significant shareholders mentioned in the table

above. These disclosed participations were identical to the disclosures in the prospectus (pages 28

to 30) of the number of shares and percentages held after the capital increase. The prospectus is

available on the Company’s website:

http://www.myriadgroup.com/Investors/Corporate-Information.aspx

Two shareholders, who held participations above 3% prior to the capital increase had disclosed

participations below the 3% threshold mark as a result of the capital increase (also disclosed in

the prospectus):

Patinex AG, CH-8832 Wilen

UBS Fund Management, CH-Basel

The Company is not aware of any shareholders agreements.

Cross-shareholdings

Myriad Group AG has not entered into cross-shareholdings with other companies.

2. Capital structure

Share capital

As of December 31, 2009, the Company has an ordinary share capital of CHF 4,419,214, consisting

of 44,192,137 registered shares with a nominal value of CHF 0.10 each. The conditional capital

amounts to CHF 447,559, consisting of 4,475,592 registered shares with a nominal value of CHF

0.10 each. The authorised capital amounts to CHF 437,374, consisting of 4,373,743 registered

shares with a nominal value of CHF 0.10 each (issuance possible until June 30, 2010).

1 Percentages include registered shares and shares expected from exercise in kind, based on the earn-out clause agreed in the contribution agreement between the shareholder and the Company. In this contribution agreement, it was agreed that the shareholder is entitled to an amount of shares (see prospectus) in the event certain targets for the Purple Labs business are met for fiscal year 2009. The targets were determined as met during the first quarter of 2010 and the earn-out shares were issued out of the authorised share capital by March 29, 2010.

The actual shareholdings may differ from the figures indicated in the table, as the Company must only be notified by its shareholders, if one of the thresholds defined in Art. 20 of the Swiss Stock Exchange Act is crossed.

2 Group of shareholders consisting of different Earlybird funds and participating holding companies managed by Earlybird Verwaltungs GmbH, Munich, Germany.

3 Group of shareholders, consisting of Partners Group Access 27 L.P., Edinburgh, Scotland; Partners Private Equity L.P., George Town, Grand Cayman Islands; Partners Group Private Equity Performance Holding Limited, St Peter Port, Guernsey Channel Islands; Pearl Holding Limited, St Peter Port, Guernsey Channel Islands; Credit Suisse Anlagestiftung 2. Säule, Zurich, Switzerland; Vega Invest Fund PLC, Dublin, Ireland. All of the six shareholders are managed by entities which are directly/indirectly managed by Partners Group Holding AG, Baar, Switzerland.

4 Group of shareholders consisting of FCPR Sofinnova Capital VI, FCPR Sofinnova Capital V, FCPR Sofinnova Capital IV, Paris, France. Sofinnova Partners SA, Paris, France is the management company of the three shareholders mentioned.


As part of the Purple Labs transaction, the contribution agreement included an earn-out clause

that would provide Purple Labs SA shareholders additional 4,368,474 shares of the Company

(at nominal value CHF 0.10), provided that specified targets for 2009 revenue and gross margin

were achieved. The earn-out clause also included an additional 323,999 Company options granted

to the former Purple Labs SA management team and certain key employees. As the conditions

(revenue and gross margin targets) were achieved in 2009, the earn-out clause shares were issued

on March 29, 2010. As of March 31, 2010, the number of outstanding ordinary shares amounts

to 48,560,611 registered shares with nominal value of CHF 0.10 each, corresponding to ordinary

share capital of CHF 4,856,061.10. The conditional capital amounts to CHF 447,559.20, consisting

of 4,475,592 registered shares with a nominal value of CHF 0.10 each. The authorised capital

declined in accordance with the above mentioned capital increase and amounts to CHF 526.90,

consisting of 5,269 registered shares with a nominal value of CHF 0.10 each (issuance possible

until June 30, 2010).

Conditional and authorised share capital in particular

Conditional share capitalPursuant to article 3a of the Articles of Incorporation, dated May 19, 2009, the share capital of

Myriad Group AG may be increased through the issuance of a maximum of 3,785,221 registered

shares, each fully paid-in, with a nominal value of CHF 0.10 each, in the maximum aggregate

amount of CHF 378,522.10 by exercise of option rights which are granted to the members of the

Board of Directors and employees of the Company and its subsidiaries as well as to the members

of the Advisory Board according to one or several employee share option plans as approved by

the Board of Directors. The subscription rights (Bezugsrechte) of the shareholders with respect

to these shares shall be excluded.

Pursuant to article 3b of the Articles of Incorporation, dated May 19, 2009, the share capital of

Myriad Group AG may be increased through the issuance of a maximum of 705,002 registered

shares, each fully paid-in, with a nominal value of CHF 0.10 each, in the maximum aggregate

amount of CHF 70,500.20 by the exercise of conversion rights, which will be granted to different

investors under the terms of a Convertible Notes Purchase Agreement. The offering price for the

new shares shall be set by the said Agreement and shall not be below CHF 10.00 per registered

share with a nominal value of CHF 0.10 each. The conversion rights shall be exercisable until

September 30, 2011 at the latest. The rights of advance subscription (Vorwegzeichnungsrechte)

and the subscription rights (Bezugsrechte) of the shareholders with respect to these shares shall

be excluded.

Authorised share capitalPursuant to article 3c of the Articles of Incorporation, dated May 19, 2009, the Board of Directors

is entitled, at any time until June 30, 2010, to increase the share capital up to a maximum

aggregate amount of CHF 437,374.30 through the issuance of a maximum of 4,373,743 registered

shares, each fully paid-in, with a nominal value of CHF 0.10 each. Partial increases shall be

permissible. The issue price, the date for entitlement for dividends and the type of contribution

shall be determined by the Board of Directors. The subscription rights (Bezugsrechte) of the

shareholders with respect to the authorised share capital shall be excluded if the authorised share

capital is used in order to enable the Company

(i) to offer to business partners of strategic importance a shareholding interest in the Company,

(ii) to acquire enterprises or parts thereof in exchange for shares of the Company.

Subscription rights which were not exercised are at the disposal of the Board of Directors who

may use them in the interest of the Company.


Changes in capital

The tables below set forth the changes in the capital of the last three reporting periods:

Ordinary share capital

Date Share capitalCapital as of December 31, 2006 CHF 1,644,862January – December 2007 CHF + 340,4141

February 2007 CHF + 15,4032

Capital as of December 31, 2007 CHF 2,000,680

February 2008 CHF + 10,2263

June 2008 CHF + 72,0143

January – December 2008 CHF + 47,9381


January 2009 CHF + 321,0793

January – December 2009 CHF + 1,4641

March 2009 CHF + 1,965,8134


Conditional share capital

Date Share capitalCapital as of December 31, 2006 CHF 470,373April 2007 CHF + 49,6045

December 2007 CHF + 92,0976

January – December 2007 CHF – 340,4141

Capital as of December 31, 2007 CHF 271,659




March 2009 CHF + 175,3024

May 2009 CHF + 50,0009


Authorised share capital

Date Share capitalCapital as of December 31, 2006 CHF 80,506February 2007 CHF – 15,4032

April 2007 CHF – 49,6045


February 2008 CHF – 10,2263

May 2008 CHF + 200,0007

June 2008 CHF – 72,0143

December 2008 CHF + 241,3348


January 2009 CHF – 321,0793

March 2009 CHF + 383,8614


1 Shares issued based on the exercise of stock options and conversion rights2 Shares issued out of authorised capital in connection with business combinations3 Shares issued out of authorised capital4 Share capital increase in conjunction with Purple Labs merger and capital increases of conditional and authorised capital,

approved by General Meeting of Shareholders on March 18, 20095 Increase conditional capital and decrease authorised capital as approved by General Meeting of Shareholders on April 29,

20076 Increase conditional capital as approved by General Meeting of Shareholders on December 7, 20077 Increase authorised capital as approved by General Meeting of Shareholders on May 15, 20088 Increase authorised capital as approved by General Meeting of Shareholders on December 15, 20089 Increase conditional capital as approved by General Meeting of Shareholders on May 19, 2009


Shares and participation certificates

As of December 31, 2009, the ordinary share capital of Myriad Group AG consists of 44,192,137

registered shares with a nominal value of CHF 0.10 each, all fully paid-in and entitled to dividend

payments as determined by the General Meeting of Shareholders. At the General Meeting of

Shareholders, each share carries one vote.

The Company has neither bearer shares, nor participation certificates outstanding.

Profit sharing certificates

The Company does not have profit sharing certificates outstanding.

Limitations on transferability and nominee registrations

The Company’s Articles of Incorporation do not contain limitations on the transferability of shares.

Regarding nominee registrations, the Company applies Art. 685d para. 2 of the Swiss Code of

Obligations, with the consequence that nominees do not have voting rights.

Convertible bonds and options

As of December 31, 2009, Myriad Group AG had outstanding convertible bonds, which are

disclosed in detail in Note 16 “Interest-bearing loans and borrowings” in the notes to the

consolidated financial statements. The total of outstanding convertible bonds can be exercised

into 94,885 shares of the Company, which represents 0.2% of the outstanding share capital.

As of December 31, 2009, Myriad Group AG also had outstanding stock options granted to

members of the Board of Directors, Senior Management and employees. For detailed information

please refer to Note 22 “Employee compensation and benefits” in the notes to the consolidated

financial statements. The total of outstanding options can be exercised into 2.7m shares of the

Company, which represents 6.1% of the outstanding share capital.


Rolf P. Jetzer

3. Board of Directors

Members of the Board of Directors

As of December 31, 2009, the Company’s Board of Directors consists of eight members. With the

exception of Simon Wilkinson who serves as the Company’s Chief Executive Officer, all Board

members are Non-Executive members and have never been members of the Senior Management

of Myriad Group AG or its subsidiaries.

Before becoming a member of the Board of Directors and CEO of Myriad Group AG, Simon

Wilkinson was CEO of Purple Labs SA (now Myriad France SAS) from September 2007 to March

2009, which became a subsidiary of Myriad Group AG upon the acquisition of Purple Labs SA on

April 17, 2009.

The Non-Executive members of the Board of Directors do not have significant business

connections with Myriad Group AG or its subsidiaries. Messrs Jean Schmitt (Sofinnova Partners

SA), Hans-Ulrich Müller (Partners Group Holding AG) and Roland Manger (Earlybird Verwaltungs

GmbH) are representatives of significant shareholders.

At the Extraordinary General Meeting of Shareholders held on March 18, 2009, Roland Manger,

Loek van den Boog and Simon Wilkinson were elected as new members of the Board of Directors

for a term of office of one year. At the Annual General Meeting of Shareholders held on May 19,

2009, Hans-Ulrich Müller and Jean Schmitt were re-elected as members of the Board of Directors,

and Rolf P. Jetzer and Michel Paulin were elected as new members of the Board of Directors.

At the same Meeting, shareholders also approved an amendment of the Company’s Articles of

Incorporation and set the term of office for all Board members to be one year (previously one to

three years). All of the Board members were elected in individual elections in 2009. On May 19,

2009, Hans Peter Baumgartner, Chairman and Jean-Claude Martinez resigned from the Board of

Directors.

FunctionChairman

Born/nationality1950, Swiss citizen

First elected2009

End of term2010

CommitteesMember of Compensation and Nominating Committee

Professional and educational background

Rolf P. Jetzer joined Niederer Kraft & Frey AG, one

of Switzerland’s leading law firms, in 1982 and has

been a Partner in the firm from 1988 to 2009. He

has exclusively focused on his activities as a board

member since 2010. Mr. Jetzer earned his doctorate

in law at the University of Zurich.

He is a graduate of Collège d’Europe, Bruges,

Belgium and was admitted to the Bar in 1981.

Other activities and vested interests

Rolf P. Jetzer is Chairman of the Board of Directors

of Swiss International Air Lines, member of the

Board of Directors of Bank Julius Bär & Co. AG as

well as Julius Bär Holding. He is a member of the

Board of Directors of several other medium-sized,

non-listed companies.


Roland Manger

Function Board member

Born/nationality1963, German citizen

First elected2009

End of term2010

CommitteesNone


Roland Manger joined Earlybird Venture Capital as

Managing Director in 1998. From 1996 to 1998 he

worked at Cybernet AG, a provider of Internet and

System Integration services which was subsequently

listed on NASDAQ and Frankfurt Stock Exchange and

later sold to PSINet. From 1995 to 1996, Mr. Manger

was Director of Business Development at Ditec AG.

From 1990 to 1995, he worked as strategy consultant

and principal with Gemini Consulting in the telecom

and media industries.

Mr. Manger studied Business, Operations Research

and Computer Science at the University of

Karlsruhe, Germany, graduating with a Dip. Wi-Ing.

(MSc equivalent) degree. He also holds an MBA from

Georgetown University in Washington D.C., USA.


Roland Manger is a member of the Board of

Directors of Upek Inc., Scoreloop and OneShield Inc.

Hans-Ulrich Müller

Function Vice-Chairman

Born/nationality1946, Swiss citizen

First elected1999

End of term2010

CommitteesMember of Compensation and Nominating Committee


Hans-Ulrich Müller is a Partner at Partners Group

since 1998. From 1998 to 2001, Mr. Müller served

as Chairman and CEO ad interim (during 1999) of

Kistler Holdings AG. From 1992 to 1997, he was a

Board member and COO of ESEC Holding AG.

Mr. Müller holds an MBA from the European

University, Cham, Switzerland.


Mr. Müller is a member of the Board of Directors of

U-Blox Holding AG.

Michel Bon


Born/nationality1943, French citizen

First elected2005

End of term2010

CommitteesMember of Audit Committee


Michel Bon was Chairman and CEO of France

Telecom from 1995 to 2002. From 1993 to 1995, he

was Head of the French Agency for Employment

(ANPE). In 1985, Mr. Bon joined Carrefour as CEO

(later CEO and Chairman) until 1993.

Mr. Bon is a graduate from ESSEC, ENA and Stanford.


Michel Bon is Chairman of Devoteam and Chairman

of the Supervisory Board of Editions du Cerf. He is

senior advisor to Permira and Roland Berger. Mr. Bon

is a member of the Board of Directors of Lafarge

and SONAE.


Michel Paulin

Jean Schmitt



First elected2002

End of term2010

CommitteesNone


Jean Schmitt joined Sofinnova as Partner in 2001

and was named Managing Partner in 2005. From

1996 to 2000, he was Chairman, CEO and founder

of SLP InfoWare, sold to Gemplus in 2000; prior

to that, he was the founder of three other start-

up companies. From 2000 to 2001, he was Vice

President Telecommunications Solutions and

Applications at Gemplus.

Mr. Schmitt graduated from Ecole Nationale

Supérieure des Télécommunications (Telecom

Paris) and holds a post-graduate degree in artificial

intelligence from Telecom Paris.


Jean Schmitt is a member of the Board of Directors

of Upek, Blyk, Inside Contactless, Sagem Wireless,

Accent and Sensitive Object.



First elected2009

End of term2010

CommitteesHead of Compensation and Nominating Committee, Member of Audit Committee


Michel Paulin has been the Chief Operating Officer

of the Louis Dreyfus Commodities Group since

February 2009. He has more than 20 years of

experience in the IT and Telecommunications

industry. In 2000, he joined Neuf Cegetel, and was

responsible for running various business units

before being appointed to Chief Operating Officer

in 2004 and then Chief Executive Officer in 2005.

In 2006, Neuf Cegetel became public and in 2008,

was sold to SFR. From 1995 to 1997, Mr. Paulin

headed business units at Group Bull and he worked

for one of its subsidiaries, Evidian, a software editor

company, as Chief Operating Officer. Previously,

he was an Engagement Manager and consultant at

McKinsey & Company.

Mr. Paulin holds degrees from French Ecole

Polytechnique and Ecole Nationale Supérieure des

Télécommunications in Paris.


Michel Paulin is a Board Member of Xchanging, a UK

public company.


Simon Wilkinson

Function Board member, Chief Executive Officer

Born/nationality1965, UK citizen

First elected2009

End of term2010

CommitteesNone


For the details on the Curriculum Vitae and on other

activities and vested interests of Simon Wilkinson,

please refer to section “Senior Management Team”

on page 26 of this Annual Report.

Loek van den Boog


Born/nationality1953, Dutch citizen

First elected2009

End of term2010

CommitteesHead of Audit Committee, Member of Compensation and Nominating Committee


Loek van den Boog is an independent consultant

and private investor since 1996, and has held various

supervisory board and line management positions

in that period. He has over 25 years of experience

in the software sector. During 2008, he served

as Executive Director and interim CEO at Patni

Computer Systems Ltd., headquartered in Mumbai,

India. From 1996 to 2004, Mr. van den Boog worked

for General Atlantic Partners as Special Advisor

and from 2006 to 2007 he was CEO of Cordys B.V.,

a leading provider of Service Oriented Architecture

and Business Process Management technology.

Former positions were the following: From 2001

through 2002, he was CEO of Meta4, from 1984

to 1996 he worked at Oracle Corporation (Head

of EMEA) and before then he worked at Deloitte

Haskins & Sells as an auditor and management

consultant. Mr. van den Boog was CFO and CIO at

the Dutch copyright association Buma/Stemra.

Mr. van den Boog holds a university degree in

Business Economics and in Public Accounting.


Loek van den Boog is Managing Director of

Vallstein Beheer B.V., Chairman of Human

Inference, Netherlands, member of the Board of

Directors of Patni Computer Systems Ltd., India

and GlobalCollect B.V., Netherlands and serves as

Chairman of Net4kids Aid Foundation.


Elections and terms of office

According to the Company’s Articles of Incorporation, dated May 19, 2009, the Board of Directors is composed of at least three members who shall be elected by the General Meeting of Shareholders for a term of office of one year. The time period from one Annual General Meeting to the following shall be deemed to be one year. Board members are eligible for re-election. There exist no limits on the terms of office. The Articles of Incorporation do not contain further rules about the election procedure (global or individual election). At the two General Meetings of Shareholders held during 2009, the Board members were elected in individual election procedures.

Internal organisational structure

Allocation of tasks within the Board of DirectorsBased on the Company’s Articles of Incorporation and Organisational Regulations, the Board of Directors sets up its own organisation at its first meeting after the General Meeting of Shareholders. It appoints a Chairman and one or more Vice-Chairmen as well as a secretary who does not have to be a member of the Board. The Board of Directors and the Committees meet at regular intervals during the year, on dates agreed upon before the start of the business year, and additionally as often as the Company’s affairs require.

The Organisational Regulations stipulate that if for reasons specific to the Company or due to circumstances relating to the availability of the Chairman of the Board of Directors or of the CEO, it should become necessary that a single individual should assume the joint responsibility of Chairman of the Board and CEO, the Board of Directors can decide that both functions shall be assumed by one and the same person and the Chairman of the Board shall be the Chief Executive Officer (CEO). In this case, the Board of Directors shall appoint an experienced Non-Executive member of the Board to act as Lead Director. The responsibility of the Lead Director shall be to ensure the ongoing supervision and control of the CEO and the Management by the Board of Directors and to generally assist the Board in performing its functions and exercising its duties and obligations.

The Lead Director shall, therefore, be entitled to convene on his/her own and chair meetings of the Board of Directors when necessary. He/she shall, at any time, be entitled to request reports from the CEO and other members of the Management. Since the Company follows a policy of clear separation between the functions of the Chairman of the Board of Directors and of the Chief Executive Officer, no Lead Directors have been appointed thus far.

Committees of the Board of DirectorsThe Board of Directors has two committees: an Audit Committee as well as a Compensation and Nominating Committee.

The Audit Committee (AC) shall be composed of at least three Non-Executive members of the Board of Directors who are appointed by the Board of Directors for a term of one year. Re-election is possible. The AC supports the Board of Directors in exercising its responsibilities in connection with the supervision over the internal control system for financial reporting, in particular with respect to matters requiring the exercise of judgments and estimates. The AC reviews the financial statements of the Company and discusses with the Company’s external auditors the results of their annual audit of the Company’s annual accounts. It also issues recommendations to the Board of Directors regarding the approval of the Company’s annual financial statements and budget. The entire list of all duties of the AC is available in the Organisational Regulations of the Company (page 12) on http://www.myriadgroup.com/Investors/Corporate-Information.aspx. The AC generally acts in a preparatory capacity, with decisions taken by the entire Board of Directors.

The Compensation and Nominating Committee (CNC) shall be composed of at least three Non-Executive members of the Board of Directors who are appointed by the Board of Directors for a term of one year. Re-election is possible. The CNC reviews and recommends to the Board of Directors the remuneration for Board members. It approves the employment agreements and compensation of the CEO and the members of the Management, including termination agreements. The CNC recommends


to the Board of Directors the compensation structure and policy, as well as benefit and pension plans for employees of the Company. It approves employee share option plans of the Company. It further supports the Board in evaluating management and Board performance. It also proposes new Board member candidates to the Board of Directors, to be recommended for election by the General Meeting of Shareholders. The entire list of all duties of the CNC is available in the Organisational Regulations of the Company (pages 8 to 10). For the listed duties, “approval” shall indicate that the CNC has the power to take decisions, whereas “recommendation” indicates that the power to take decisions is subject to the approval of the entire Board of Directors.

Work methods of the Board of Directors and its CommitteesIn fiscal year 2009, the Board of Directors and the Committees met as follows:

Board of Directors: 9 meetings, 6 telephone conferences, 4 circular resolutions•

Audit Committee: 2 meetings, 1 circular resolution•

Compensation and Nominating Committee: 4 meetings, 2 telephone conferences, 2 circular •

resolutions

The average duration for the meetings has typically been between five and six hours for Board meetings, three hours for Audit Committee and three hours for Compensation and Nominating Committee meetings. The Chief Executive Officer, Chief Financial Officer and the Chief Commercial Officer generally attend Board meetings and, if their presence is needed, also Committee meetings. The CEO attends the Compensation and Nominating Committee meetings as appropriate, and the CFO generally attends the Audit Committee meetings. There is no regular calling by the Board of Directors or its Committees upon external consultants to deal with specific issues.

Areas of responsibility of the Board of Directors and Senior Management

To the extent permissible by law and the Company’s Articles of Incorporation, and unless provided otherwise in the Organisational Regulations, the Board of Directors has delegated the management of the Company to the Committees and the Senior Management.

In addition to the non-transferable and non-alienable legal duties, the Company’s Board of Directors has reserved decisions on the following issues for approval by the Board of Directors:

issue of the Company’s internal policies (particularly regarding insider trading, issue of employee •

manuals)

issue of Corporate Governance principles and regulations•

issue of risk control standards, limits and risk principles•

appointment and removal of the members of Management•

approval of the budget and strategy plan for each business year•

purchase of assets whose value exceeds USD 500,000 and whose purchase is not provided for in the •

budget

sale or agreements concerning the encumbrance of assets by mortgage, pledge or similar restrictions •

in excess of USD 500,000

issue of any guarantee, surety or undertaking to pay in the name of the Company in excess of •

USD 500,000

purchase and sale of participations in other companies, if not provided for in the budget and in •

excess of USD 500,000 in the aggregate

formation of subsidiary companies and branch offices in Switzerland or abroad•

purchase or sale of real estate or parts thereof•

any investment made, or liability or debt incurred, by the Company, which is not provided for in the •

budget and is individually in excess of USD 500,000

approval of option grants•


The Senior Management has the following principal tasks:

Execution of the strategy set by the Board of Directors•

Responsibility for the day-to-day management and ongoing operations of the Company•

Overall responsibility for the development and implementation of the Company’s vision, long-term •

strategies and key partnerships as well as the proposal for key acquisitions, mergers and investments

Preparation of proposals which have to be submitted to the Board of Directors for approval•

Regular information to the Board of Directors about the Company’s business development•

Information and control instruments vis-à-vis the Senior Management

The Board of Directors ensures that it receives sufficient information from Senior Management to perform its supervisory duties:

Monthly Board Reports – All Board members receive an extensive written report on a monthly basis. This report reflects issues of the previous month and includes the following details:

Finance Report: Key figures for the month and on a year-to-date basis, as well as comparisons against •

budget for the Group and the Divisions (e.g. Revenue, Gross Profit, OPEX, EBITDA, etc.), Quarterly review against budget when appropriate, Balance sheet items (e.g. Cash, Working Capital, Cash outlook, Receivables, etc.), Cash Flow, Number of employees, Budget update looking forward, etc.

Commercial Report: Targets and achievements on commercial aspects of the business for the Group •

and the Divisions, information on developments in the addressed business and markets, bookings information, press relations updates, etc.

Products/Operations Report: Update and forecasts on product releases, planned events, progress in •

key projects, etc.

Update on potential M&A activities•

Board members will also approve the information issued in the framework of the Annual Report and Half-Year Report.

Usually, the Board of Directors will meet at regular intervals and hold between eight to ten meetings per year, with additional informal meetings or teleconferences to be held as required between the Directors and the Chairman.

The Chief Executive Officer, Chief Financial Officer and the Chief Commercial Officer participate at all the meetings of the Board of Directors and report on the individual items mentioned above. Apart from the meetings, the CEO reports immediately any extraordinary event and/or change within the Company or the Group to the Chairman as appropriate. The CFO generally attends all meetings of the Audit Committee.

During the Board meetings, each member of the Board can request information from the other members of the Board or from the members of the Management on all affairs of the Company and the Group. Outside of Board meetings, each member of the Board can request from the CEO information concerning the course of business of the Company and the Group and, with authorisation of the Chairman, about specific matters.

The corporate risk management function is appointed to the Chief Financial Officer. The risk management matrix is reviewed and approved by the Board of Directors once per year.


4. Senior Management

As of December 31, 2009, the Senior Management (Executive Team) of the Company consists of

six members.

Simon Wilkinson

Function Chief Executive Officer, Member of the Board of Directors


First appointed2009

Professional and educational backgroundSimon Wilkinson was appointed Chief Executive Officer of Myriad in March 2009, following the acquisition of Purple Labs (where he held the same position) by Esmertec, creating Myriad. Previously, he was CEO of Purple Labs SA from September 2007 to March 2009 and successfully drove that company’s acquisition of the Openwave Systems mobile software business and the Sagem Mobile applications business. He was the Founder of Magic4 Ltd in March 2000 and served as its Chief Executive Officer. Magic4 became the global market leader in mobile messaging software before being sold to Openwave Systems in August 2004. Earlier in his career, Mr. Wilkinson worked for Philips in senior international sales roles from January 1996 to February 2000, and then raised venture funding of $21 million from 3i, Philips & Motorola to found Magic4 from Philips. Simon Wilkinson was personally recognised as the Ernst & Young Emerging Entrepreneur of the year 2002.

Other activities and vested interestsSimon Wilkinson is a member of the Board of Directors of Myriad Group AG. He serves as Chairman of Mobilaris AB.

James Bodha

Function Chief Financial Officer


First appointed2009

Professional and educational backgroundJames Bodha serves as Chief Financial Officer of Myriad since September 2009. He has over 12 years of senior financial management experience with a successful track record in managing business operations in a variety of publicly listed companies in the engineering, retail and technology sectors. Prior to joining Myriad, James Bodha was CFO at Aircom International, the market leader in mobile network planning and optimisation, from May 2006 to July 2009. Before Aircom, he was CFO of the Global Mobile Handset Software Division of Openwave Systems, a NASDAQ-listed mobile software and services company based in San Francisco from August 2004 to April 2006. His arrival at Openwave followed its acquisition of Magic4, the global market leader in mobile messaging, where Mr. Bodha had been CFO from September 2003 to August 2004. Prior to joining Magic4, James Bodha was the Finance & Commercial Director at Anite Public Sector Ltd from January 2001 to June 2003, the Trading Finance Director for the UK Retail Division at Airtours Ltd from November 1999 to January 2001, and a Divisional Finance Director at Asda plc from May 1997 to November 1999.

James Bodha has a Bachelor of Science degree (Hons) in Chemistry from Owens University, Manchester, and is a qualified Chartered Accountant and member of the Institute of Chartered Accountants for England and Wales (ICAEW).

Other activities and vested interestsNone


Malcolm Dawe

Function Chief Product Officer


First appointed2009

Professional and educational backgroundMalcolm Dawe is Chief Product Officer of Myriad Group AG since March 2009, following the acquisition of Purple Labs (where he held the same position from February 2009) by Esmertec, creating Myriad. In his role, he is responsible for defining and driving the product roadmap of the Company. Malcolm Dawe has over twenty years of experience in leadership positions in the communications industry, managing most of this period in high growth developing markets from Asia to Latin America. Before February 2009, he spent 9 years in senior positions at Motorola, and his most recent role was the VP Global Strategy and Business Development. He spent 3 years in South West Asian markets (India and Bangladesh) as VP and General Manager and was the VP and General Manager Latin America Product and Applications from 2002 to 2006. From 1985 to 1997, Mr. Dawe was instrumental in building Philips’ paging business as Director and General Manager and in 1997 joined Philips Mobile Communications business as Director of Market Research and Planning.

Malcolm Dave has a Bachelor of Science Degree (Hons) in Physics from Owens University, Manchester and a Diploma in Management Studies from East Anglia University.


Steve Langkamp

Function Chief Commercial Officer

Born/nationality1961, US citizen

First appointed2009

Professional and educational backgroundSteve Langkamp is Chief Commercial Officer of Myriad since March 2009, following the acquisition of Purple Labs (where he held the same position) by Esmertec, creating Myriad. He is in charge of commercial strategy, corporate development, all marketing activities and is heading the Mobile Services Division. Prior to joining Purple Labs in December 2007, he was Chief Operating Officer of ShoZu, a provider of mobile applications enabling consumers to connect with their online social networks from March 2006 to November 2007. In this capacity, he was responsible for the development and delivery of products and services, and all internal operations. Prior to joining ShoZu, Steve Langkamp was Vice President and General Manager in the Client Products and Services Group of Openwave from August 2004 to September 2005. From April 2003 to August 2004, he was Chief Operating Officer at Magic4. Prior to joining Magic4, Mr. Langkamp was Vice President of Mobile Solutions at financial services provider Euronet Worldwide from April 2001 to February 2003. From March 1998 to December 2000, he was the number two executive at Eurotel Prague (now Telefonica O2 Czech Republic), serving as Executive Director for sales and marketing, and leading all commercial activities. From April 1995 to February 1998, he was General Manager for devices and services at One 2 One (now T-Mobile UK).

Steve Langkamp holds an MBA from the University of Chicago, and a BA with honours in Mathematics from Washington University.



Benoit Schillings

Function Chief Technology Officer

Born/nationality1963, Belgian citizen

First appointed2009

Professional and educational backgroundBenoit Schillings was appointed Chief Technology Officer of Myriad in September 2009. Prior to joining Myriad, he held the position of Chief Technologist at Nokia from June 2008 to September 2009. In this role, he was responsible for Nokia’s cross-device technology as well as Technology Advisor to Nokia’s CEO, Olli-Pekka Kallasvuo. Benoit Schillings joined Nokia following their acquisition of Trolltech, where, as Chief Technologist, he was responsible for leveraging Trolltech’s existing technologies and services from November 2005 to June 2008. As Chief Technology Officer at Openwave Systems from August 2000 to October 2005, he was responsible for the structure and design of Openwave Phone Suite Version 7. In 2003, he was named Distinguished Engineer by Openwave for his influential work in the conception of “top to bottom” integrated software for mass-market phones. Benoit Schillings is probably best known across the industry for his innovative work on the Be Operating Systems between January 1991 and August 2000, where he was a principal contributor to the launch of Be Incorporated and designed, developed and implemented the technically acclaimed Be Operating System.

Benoit Schillings is a Computer Science graduate of Université Catholique de Louvain (UCL) in Belgium.


Gordon Tsang

Function SVP Sales of Device Solutions & General Manager Asia

Born/nationality1966, Hong Kong citizen

First appointed 2009

Gordon Tsang is Senior Vice President of Sales for Device Solutions, and General Manager of Asia since March 2009, following the acquisition of Purple Labs (where he held the same position) by Esmertec, creating Myriad. He is responsible for business development and sales in the Asia Pacific region and also supervises the Beijing office and represents Myriad’s interests in Asia. From May 2007 to December 2007, he was Vice-President and General Manager for the worldwide client software business at Openwave, a leading provider of software applications enabling revenue-generating data services on mobile and broadband services. He headed the sales and professional services organisation and successfully strengthened Openwave’s market position in Asia. From August 2004 to May 2007, Gordon Tsang was the Area Vice President for Asia Pacific at Openwave. His previous experience includes Asia Pacific Director at Magic4 (from March 2002 to August 2004), where he successfully developed the mobile messaging business, and Asia Sales Director for Zi Corporation (from December 1999 to March 2002), where he opened new markets for its text input solutions.

Gordon Tsang holds an engineering degree from Leeds Metropolitan University in Electrical and Electronic engineering.




Apart from Simon Wilkinson as further detailed in the tables above, the Senior Management

members neither pursue activities in governing and supervisory bodies of important Swiss and

foreign organisations, institutions or foundations under private and public law, nor do they pursue

permanent management or consultancy functions for important Swiss and foreign interest

groups. None of them have official functions or political posts.

Personnel Changes in the Senior Management

On March 18, 2009, Thomas Hornung stepped down as CEO and at the same date Simon Wilkinson

was appointed CEO of the Company. On March 18, 2009, the management team was enlarged by

appointment of the following new members: Paul Aitken, Chief Operating Officer, Steve Langkamp,

Chief Commercial Officer, Malcolm Dawe, Chief Product Officer, Alexandra de Vazeilles, SVP

Human Resources and Gordon Tsang, SVP Sales Device Solutions & General Manager Asia. As

of the same date, due to internal reorganisation, Joe Burke resigned as EVP Global Services &

Multimedia Devices Unit.

On July 23, 2009, the Company announced that Paul Aitken was leaving the Company. Effective

September 2, 2009, James Bodha followed Konrad Hurni as Chief Financial Officer. Effective

October 1, 2009, Benoit Schillings was appointed Chief Technology Officer of the Company. On

October 21, 2009, the Company announced that Jean-Luc Gianduzzo, Senior Vice President and

General Manager of the Mobile Services Division was leaving the Company. On December 11, 2009,

the Company announced that Alexandra de Vazeilles, Senior Vice President Human Resources

was leaving the Company with immediate effect. On March 1, 2010, the Company announced that

Liz Hitchen would be appointed as Vice President of Human Resources, with effect from March 8,

2010.

Management contracts

There exist no management contracts delegating management duties to third parties.


5. Compensation, shareholdings and loans

Content and method of determining the compensation and the share ownership programmes

Compensation to the Non-Executive members of the Board of DirectorsThe compensation for the Non-Executive members of the Board of Directors is proposed by the

Compensation and Nominating Committee once per year and decided upon by the entire Board

of Directors at its own discretion. The compensation takes into account the responsibilities of

each member (Chairman of the Board of Directors, Committee Chairman or Committee member),

and is usually paid in cash and in stock options that have a vesting period of (i) three months for

sign-on-grant-options and (ii) 1/36 on each of the 36 consecutive months following the date of

grant. In fiscal year 2009, the Non-Executive members of the Board of Directors received their

compensation in cash and in options.

Compensation for the members of Senior ManagementThe Compensation and Nominating Committee reviews and sets the remuneration of the members

of Senior Management. The compensation of Senior Management consists of a basic salary that

reflects their individual business responsibilities and a bonus. The CNC considered separate

bonuses for the first and second half of the financial year 2009, given the creation of Myriad

at the end of Q1, 2009. The Senior Management team bonus for the first half was based on the

performance of the separate companies relative to target.

The bonus for each member of Senior Management in the second half of the financial year was

based on both target-based Company results and individual Key Performance Indicators (“KPIs”)

specific to the area for which that individual is responsible. In 2009, the range of weightings of

these components across the Senior Management team was:

(i) 50% for achievement of Revenue target

(ii) 25% – 50% for achievement of EBITDA target

(iii) 0% – 25% for achievement of specific KPIs relevant to the individual member

Examples of the KPIs used for individual members of the Senior Management team include

product delivery, systems implementation, bookings targets and Company integration metrics.

No external advisors were consulted in respect of structuring the compensation for the Senior

Management team.

The split between the basic salary and bonus depends on the particular management position.

There were no allowances for housing paid following the acquisition of Purple Labs, creating

Myriad. For fiscal year 2009, the bonus component as a percentage of the total compensation

reached 50% for the current CEO and between 5% and 44% for the other members of Senior

Management.

The Board of Directors, upon recommendation of the Compensation and Nominating Committee,

approves the grant of stock options to the Senior Management to reward particular achievements

and for the purpose of retaining key contributors. Stock options granted during fiscal year 2009

vest as follows:

(i) for eligible persons being granted with stock options for the first time, 1/3 of the options vest

12 months after the grant date and 1/36 vests on each of the 24 consecutive months. For

subsequent grants the one year restriction no longer applies.

(ii) options that were granted under option plans of Purple Labs SA and that were converted

into options under the Company’s option plan according to the rules set forth in the relevant

agreements entered into in the framework of the acquisition of Purple Labs SA by Myriad

Group AG with Purple Labs SA vest (a) by 33% one year upon grant and then the remaining

67% over a period of 18 months or (b) two years upon grant, followed by a blocking period of

two years.


The members of the Senior Management do not attend meetings of the Compensation and

Nominating Committee at which their compensation is being discussed and approved. The CEO

attends the meetings of the CNC when the compensation of the Senior Management team is being

discussed, but does not attend when his own compensation is being discussed and approved. The

CNC informs the Board of any decisions taken after each committee meeting.

During the financial year 2009, Thomas Hornung stepped down as CEO of the business, and

Konrad Hurni stepped down as CFO. Further details of the settlement agreements, and details

of remuneration and indirect benefits of key management are shown in Note 22 “Employee

compensation and benefits” in the notes to the consolidated financial statements.

Compensation, shareholdings and loans

Details of the compensation, shareholdings and loans to acting and former members of the Board

of Directors and of the Executive Board are reported in detail within the Statutory Financial

Statements of this Annual Report on pages 102 and 103.

6. Shareholders’ participation

Voting rights and representation restrictions

The Company’s Articles of Incorporation do not contain any restrictions on voting rights and

representations.

Statutory quorums

The Company’s Articles of Incorporation do not contain rules divergent from Swiss law.

Convocation of the General Meeting of Shareholders

The Company’s Articles of Incorporation provide for the convocation of the General Meeting of

Shareholders via publication in the Swiss Official Gazette of Commerce no later than 20 days

before the meeting. In addition, the invitation is sent by mail to the shareholders registered in the

Company’s share register.

Agenda

Shareholders who together hold shares with a nominal value of no less than CHF 1 million may

request that an item be put on the agenda of the General Meeting of Shareholders. Such request

shall be made in writing, at the latest 45 days prior to the meeting, by indicating the proposals of

the petitioning shareholders.

Inscriptions into the share register

Based on a resolution of the Company’s Board of Directors, the cut-off date for the closing of the

share register before a General Meeting of Shareholders is set by the Board of Directors on an

individual basis, whereas the date shall be as close as possible to the scheduled meeting date. For

the General Meeting of Shareholders to be held on May 25, 2010, the closing date for the share

register has been set for the period commencing on May 12, 2010 and ending on May 26, 2010.

7. Changes of control and defence measures

Duty to make an offer

The Company’s Articles of Incorporation do not contain any opting-out or opting-up provisions,

meaning that a shareholder is required to make a full tender offer if the legally prescribed

threshold of 331/3% of the voting rights of the Company is reached (see Art. 32 of the Federal Act

on Stock Exchanges and Securities Trading).

Clauses on changes of control

The employment contracts of the current Senior Management members do not provide for any

change of control clauses and the notice periods remain unaffected by a change of control event.


8. Auditors

Duration of the mandate and term of office of the lead auditor

KPMG AG, Zurich (“KPMG”) were registered in the Commercial Register of the Canton of Zurich

as the Company’s auditors on October 29, 2001 and have been auditors of the Company since.

On May 19, 2009, KPMG were re-elected by the Annual General Meeting of Shareholders as the

Company’s auditors for a term of office of one year. Markus Forrer has been the lead auditor since

the audit of the year 2003.

Auditing fees

For fiscal year 2009, KPMG charged the Company auditing and audit-related fees amounting to

CHF 972,890 (USD 898,215).

Additional fees

For additional services, KPMG charged the Company the following fees during fiscal year 2009:

Tax services CHF 142,669 (USD 131,718)

Consulting CHF 42,623 (USD 39,352)

Total CHF 185,292 (USD 171,070)

Information tools pertaining to the external audit

The Audit Committee reviews the engagement letter of the auditors, the fees and the terms of

the planned audit work once per year. It discusses the results of the annual audit of the annual

accounts with the external auditors.

In fiscal year 2009, the external auditors performed a detailed audit report on the FY 2008 report

and a financial review of the Half-Year 2009 statements. Representatives of the external auditors

participated at 2 meetings of the Audit Committee.

The Audit Committee also assesses the qualification, independence and performance of the

external auditors as well as the coordination and interaction between the Company and the

auditors.

The Board of Directors verifies once per year the selection of potential auditors, in order to

propose its preferred audit firm for election to the shareholders at the General Meeting of

Shareholders. The Audit Committee evaluates the effectiveness of the auditors in accordance with

the Swiss law and makes a recommendation to the entire Board of Directors with regards to the

preferred audit firm.

The Board of Directors follows the regulations of the Swiss Code of Obligations with regards to the

rotation intervals of the lead auditor, i.e. the lead auditor has to be rotated every seven years.

The Audit Committee also examines the proportion between the auditing fee for the annual

financial statements and the additional non-audit services performed by the auditors. It examines

potential consequences regarding the independence of the auditors. During fiscal year 2009, the

Audit Committee and the Board of Directors concluded that the independence of the auditors was

fully ensured at all times.


9. Information policy

For the benefit of its shareholders and the public interest, the Company pursues an open and

transparent information policy. Myriad Group AG publishes its financial reports on an annual

report and half-year basis. The Company also publishes by media release condensed financial

information for the first and third quarter of the fiscal year. The annual and half-year reports

are available on the Company website in electronic form or can be ordered from the Company

in print form. Web-link for the financial reports

http://www.myriadgroup.com/Investors/Financial-Publications.aspx

When the annual results are released, Myriad Group organises a physical conference for the

media and the financial community to discuss details of the reported earnings. For the half-year

results, as well as for the first and third quarter results, the Company organises either a physical

conference or a conference call.

Official notices are published in the Swiss Official Gazette of Commerce (Schweizerisches

Handelsamtsblatt).

The Company website www.myriadgroup.com contains extensive information on the business

activities, Company structure, financial reports, media releases, investor relations, etc.

Web-links regarding the SIX Swiss Exchange push-/pull-regulations concerning ad hoc publicity

issues are

http://www.myriadgroup.com/Investors/Investor-Contact.aspx (subscribe to Email alerts) and

http://www.myriadgroup.com/Media-Centre/News.aspx

The current Articles of Incorporation and the Organisational Regulations are available on

http://www.myriadgroup.com/Investors/Corporate-Information.aspx

For investor relations contacts and a summary of anticipated key dates in 2010 please refer to

page 108 of this Annual Report.

p.34

our leadership stems from deep experience and its smart application

p.35

Financial Report 2009

p.36 Management discussion and analysis of results

Management discussion and analysis of results

Financial overview

(in USD 1,000) FY 2008 IFRS

FY 2009 IFRS

FY 2009 pro forma

Revenue 41,257 105,378 125,806

Gross profit 22,785 71,226 86,412

Gross margin in % 55.2% 67.6% 68.7%

EBITDA before restructuring charges 2,463 16,464 24,977

EBITDA margin in % 6.0% 15.6% 19.9%

EBITDA 2,463 8,974 15,658

EBIT without exceptional charges -3,266 -10,052 -3,331

EBIT -3,757 -53,017 -48,125

Net result -7,723 -55,696 -51,351

Operating cash flow 931 25,493 24,001

Cash and cash equivalents 3,330 33,235 33,235

Shareholders’ equity 55,752 96,560 96,560

Equity ratio in % 65.4% 56.2% 56.2%

Total headcount at year end (FTE) 405 778 778

Market capitalisation (CHF 1,000) 156,924 214,332 214,332

Executive financial summary1

Myriad revenues grew over 200% to USD 125.8 million in 2009 (USD 41.3 million in FY 2008)

reflecting the contribution from the acquisition of Purple Labs. The Group delivered on its revenue

guidance to the Stock Market as communicated in February 2009, despite a period of global

economic turmoil and tough market conditions. Underlying pro forma profitability at both Gross

Profit and EBITDA (before restructuring charges) level improved significantly reflecting richer

margins of the Purple Labs business along with economies of scale from the enlarged operations.

Gross margins improved by 13.5 percentage points to 68.7% whilst EBITDA (pre restructuring

charges) margins improved by 13.9 percentage points to 19.9%.

Net loss was USD 51.4 million (USD 7.7 million in 2008). This reflected a one-off restructuring

charge of USD 9.3 million associated with the integration of Purple Labs, intangible impairments

of USD 35.5 million and amortisation and depreciation expenses of USD 28.3 million.

Underlying cash flow from operations (excluding cash acquired with the Purple Labs business) was

USD 24.0 million (USD 0.9 million in 2008), reflecting strong profit conversion together with tight

working capital management. As a result, Myriad’s liquidity improved markedly with cash and cash

equivalents increasing to USD 33.2 million (USD 3.3 million in 2008), including USD 22.2 million

of cash gained through the acquisition of Purple Labs, whilst net cash (cash and cash equivalents

and short-term investments and marketable securities, less interest bearing debt) increased to

USD 29.3 million (USD -2.6 million in 2008).

Revenues

Licence revenues grew USD 48.1 million, i.e. over 200% to USD 71.7 million (USD 23.6 million

in 2008) driven by a strong contribution of the Device Solutions Division which included the

revenues of Purple Labs. This reflected solid demand for our products and the recurring nature of

software revenues where customers will continue to licence software for several years following

the original insertion of software into devices.

1 The analysis and discussion of 2009 results are based on the pro forma basis results, as if Myriad’s acquisition of Purple Labs had closed on January 1, 2009. Myriad management believes that pro forma financial information provides more meaningful period-to-period comparisons of its performance, since under IFRS, the results of Purple Labs are only consolidated from April 1, 2009.

Management discussion and analysis of results p.37

Service revenues grew similarly over 200% to USD 54.1 million (USD 17.7 million in 2008)

reflecting the strong interdependency with licences sales, since customers will invariably procure

services such as porting and integration as well as annual maintenance when sourcing licences.

Geographically the proportion of revenues grew the most in Europe with the addition of SAGEM

Wireless revenues through the Purple Labs acquisition. In total SAGEM Wireless accounted for

USD 55.4 million or 44% of pro forma revenues in 2009.

Divisionally, whilst the Device Solutions Division delivered a strong contribution to Group revenues

with USD 112.8 million compared to USD 24.7 million in 2008, the Mobile Services Division (MSD)

contributed USD 13.0 million, down USD 3.6 million from 2008 (USD 16.6 million). The MSD decline

reflects reduced demand from Mobile Network Operators who were cutting back on their own

OPEX and CAPEX in response to the economic downturn, as well as a slippage in the timing of

the closure of prospective orders. In October 2009, the divisional management and sales team of

MSD were reorganised as part of our efforts to deliver a recovery in sales growth which Myriad

management are confident will be delivered in 2010.

Cost of revenues and gross margins

Cost of licences as a percentage of revenue improved year-on-year, which lead to a

19.2 percentage point improvement in licence gross margins. Gross margin for fiscal year 2009

reached 94.3%. The increase reflects the contribution of the Purple Labs licence revenues which

unlike the former Esmertec licence revenues carry no Sun tax (tax payable to Sun Microsystems

for licensed Java extensions) and are therefore delivering higher margins.

Cost of services as a percentage of revenues also improved year-on-year, delivering a

6.1 percentage point improvement in gross margins of our service business to 34.8% for fiscal

year 2009. This reflects the richer margin of the Purple Labs services business, where higher

pricing proved that premium customers are willing to pay for strong technical expertise to port

and integrate software.

Research and development

Gross Research and Development expenses (R&D) before capitalised R&D increased both in

absolute terms and as a percentage to revenues by USD 31.0 million and 11.3 percentage points

respectively to USD 39.1 million and 31.1% (USD 8.2 million and 19.8% in 2008). The growth in

R&D arose from the contribution of the Purple Labs acquisition. The increase as a percentage

of revenue reflects a medium term increase in levels of investment needed to expand the

product portfolios of the Myriad business in order to meet future customer needs. During the

year we opened a new office in Chengdu to increase the number of engineers based in China

going forward, and facilitate management’s strategy to reduce the cost of innovation across

the Group. R&D capitalisation increased by USD 0.3 million to USD 4.6 million during the

year (USD 4.3 million in 2008) which was relatively low compared to the gross levels of R&D

spending. This low level of capitalisation is a reflection of management’s conservative approach

in capitalising R&D, which reduces the potential of write-offs in the future, and prevents an

understatement of OPEX in the short term.

Sales and marketing

Sales and marketing expenses increased by USD 0.3 million or 3% to USD 9.4 million

(USD 9.1 million in 2008). The minimal increase relative to the growth in revenues of over 200%

reflects substantial synergy savings delivered through the combination of the Esmertec and

Purple Labs businesses. Group Management was able to eliminate significant duplication of sales

and marketing roles which served the common customer groups of the former Esmertec and

Purple Labs businesses.

p.38 Management discussion and analysis of results

General and administrative

General and administrative expenses (“G&A”) grew by USD 15.7 million to USD 24.0 million

(USD 8.3 million in 2008) reflecting the increased number of sites and infrastructure acquired

through the acquisition of Purple Labs. G&A as a percentage of revenues declined by 1 percentage

point to 19% (20% in 2008), as a result of the economies of scale of our combined businesses.

Management continues to be focused on driving further cost savings in 2010 through back office

rationalisation and tighter day-to-day cost management.

Restructuring expenses

As a result of the acquisition of Purple Labs, restructuring expenses and provisions in a total

amount of USD 9.3 million were charged to the income statement for fiscal year 2009, to account

for the one-off charges associated with combining the businesses. This included costs associated

with the elimination of duplicated roles and improvements needed to the back office to support

the enlarged business, such as increasing the capacity of the IT network.

Other income and expenses

Other income of USD 6.0 million (USD nil in 2008) comprised R&D tax credits of USD 4.2 million

and grant income of USD 1.8 million, both arising from the former Purple Labs business. The R&D

tax credits reflected a catch up of multiple year claims (2006 – 2008) and are expected to be

recurring going forward, although at lower rates than current levels. The grant income relates to

funding in France.

EBITDA

EBITDA (before restructuring charges) amounted to USD 25.0 million (USD 2.5 million in 2008).

The EBITDA margin compared to the previous year improved by 13.9 percentage points to 19.9% for

fiscal year 2009.

Amortisation and impairment of intangible assets

The amortisation of intangible assets amounted to USD 26.9 million (USD 5.2 million in 2008)

and mainly reflects the amortisation of intellectual property (“IP”) related to the Cellicium,

Purple Labs and Sagem Wireless Certoise 2G organisations. Myriad decided to record a non-cash

impairment charge in 2009 in a total amount of USD 35.5 million (USD 0.5 million in 2008) to

reduce the carrying value of goodwill and other intangible assets. The total impairment includes

USD 25.7 million against certain intangible assets in the Device Solutions Division and USD 9.8

million of goodwill in the Mobile Services Division. More explanation regarding the impairment is

provided in Note 12.

Operating loss (EBIT) before exceptional charges

The EBIT before exceptional charges amounted to USD -3.3 million (USD -3.3 million in 2008).

The exceptional charges during fiscal year 2009 included the restructuring costs related to the

acquisitions and impairment of certain intangible assets, which together totalled USD 44.8 million.

Finance income and expenses

Finance income of USD 0.2 million (USD 0.1 million in 2008) primarily comprised interest earned

on cash and investments. The increased interest income reflects the enhanced net cash levels

experienced following the acquisition of Purple Labs. Finance expenses of USD -3.6 million

(USD -3.4 million in 2008) primarily reflect foreign exchange losses of USD -0.8 million and

interest expenses of USD -1.2 million (USD -0.7 million and USD -1.9 million in 2008 respectively).

Net loss

As a result of the above mentioned one-time charges and further expenses related to the

financial results, net loss for fiscal year 2009 amounted to USD 51.4 million (net loss of

USD 7.7 million in 2008).

Management discussion and analysis of results p.39

Cash flow

Net cash generated by operating activities was USD 24.0 million during the year (USD 0.9 million

in 2008). The key driver for the increase year-on-year was strong profit conversion and

tight working capital management. Net cash used in investing activities was USD 12.9 million

(USD 4.4 million in 2008), and mainly reflected investment in plant, property and equipment

(USD 2.9 million), purchase of marketable securities (USD 4.1 million) and additions to intangible

assets and development costs (USD 5.9 million). Net cash used in financing activities was an

outflow of USD 3.7 million (in flow of USD 2.1 million in 2008) which resulted from repayment

of borrowings.

Liquidity and capital resources

As a result of the integration of the Purple Labs business, Myriad’s liquidity improved substantially

during fiscal year 2009. At December 31, 2009, the balance of cash and cash equivalents,

as well as short-term investments and marketable securities increased to USD 38.0 million

(USD 3.7 million at December 31, 2008). The net cash position (cash and cash equivalents and

short-term investments and marketable securities less interest bearing debt) amounted to

USD 29.3 million at year end of 2009 (USD -2.6 million at year end 2008).

Shareholders’ equity increased to USD 96.6 million (USD 55.8 million at December 31, 2008),

reflecting a continuing strong equity ratio of 56.2% at December 31, 2009. Myriad remains well

capitalised and financially solid to pursue its corporate strategy in 2010 and the years to come.

p.40 Consolidated financial statements

Myriad Group, Dübendorf

Consolidated balance sheet

(in USD 1,000) Notes

At January 1,

20081

At December 31,

20081 2009

ASSETS

Current assets

Cash and cash equivalents 5 4,847 3,330 33,235

Short-term investments and marketable securities 6 423 417 4,718

Trade accounts receivable 7 11,944 10,060 8,704

Income tax receivable 7 857 –

Other receivables 8 763 3,375 6,258

Inventory 9 1,720 1,288 864

Prepaid expenses and accrued income 10 1,439 4,978 8,812

Total current assets 21,143 24,305 62,591

Non-current assets

Furniture and equipment 11 1,004 1,483 2,286

Intangible assets 12 39,192 55,863 105,558

Long-term investments and other financial assets 13 4,868 3,569 1,459

Total non-current assets 45,064 60,915 109,303

Total assets 66,207 85,220 171,894

LIABILITIES AND EQUITY

Current liabilities

Interest-bearing loans and borrowings 16 4,516 5,000 4,985

Trade accounts payable 3,121 3,890 3,234

Income tax payable 154 132 876

Advances received 3,864 3,521 4,806

Other payables 17 8,949 3,820 12,481

Accrued expenses 14 5,499 6,003 11,032

Deferred revenue 19 2,332 2,114 26,626

Total current liabilities 28,435 24,480 64,040

Non-current liabilities

Interest-bearing loans and borrowings 16 2,466 1,370 3,670

Employee benefits 18 1,052 2,533 1,381

Deferred tax liabilities 24 1,747 1,085 6,243

Total non-current liabilities 5,265 4,988 11,294

Total liabilities 33,700 29,468 75,334

Shareholders’ equity

Share capital 20 1,777 2,019 4,259

Share premium 170,983 103,335 194,412

Cumulative change in fair value of financial assets 306 500 36

Cumulative translation adjustment -11,047 -15,559 -18,957

Accumulated losses -129,512 -34,543 -83,190

Total equity attributable to owners of the parent company 32,507 55,752 96,560

Non-controlling interest – – –

Total equity 32,507 55,752 96,560

Total liabilities and equity 66,207 85,220 171,894

1 Restated, see Note 2

These consolidated financial statements should be read in conjunction with the accompanying notes.

Consolidated financial statements p.41

Consolidated income statement

(in USD 1,000, except for per share information) Notes

Year ended December 31,

20081 2009

Licence revenue 23,601 59,012

Service revenue 17,656 46,366

Total revenue 41,257 105,378

Cost of licence revenue -5,878 -4,054

Cost of service revenue -12,594 -30,098

Total cost of revenue -18,472 -34,152

Gross profit 22,785 71,226

Research and development, net of capitalised costs 12 -3,883 -28,178

Sales and marketing -9,115 -8,326

Bad debt expense 7 523 -893

Restructuring and integration costs 15 – -7,489

Other income and expenses – 3,799

General and administrative -8,337 -22,377

Amortisation of intangible assets 12 -5,239 -25,303

Impairment of intangible assets 12 -491 -35,476

Loss from operations -3,757 -53,017

Financial income 23 85 156

Financial expenses 23 -3,384 -3,199

Loss before income taxes -7,056 -56,060

Income tax expense/benefit 24 -667 364

Net loss -7,723 -55,696

Attributable to:

Owners of the parent company -7,723 -55,696

Non-controlling interest – –

-7,723 -55,696

Average number of shares 20,756 37,901

Basic and diluted loss per share in USD 21 -0.37 -1.47




Consolidated statement of comprehensive income

(in USD 1,000)


20081 2009

Net loss for the period -7,723 -55,696

Other comprehensive income:

Exchange differences on translating foreign operations -201 6,914

Change in fair value of financial assets, net of tax 179 -464

Other comprehensive loss/income net of tax for the period -22 6,450

Total comprehensive loss for the period -7,745 -49,246

Loss attributable to:

Owners of the parent company -7,745 -49,246

Non-controlling interest – –

-7,745 -49,246



Consolidated financial statements p.43

Consolidated statement of changes in equity

(in USD 1,000)

Attributable to equity holders of the parent company

Non-

controlling

interest

Total

equity

Share

capital

Share

premium

Treasury

shares

Changes in

fair value

of financial

assets

Cumulative

translation

adjustment

Accumulated

losses Total

Balance at January 1, 2008 1,777 170,983 – 306 -11,047 -117,575 44,444 – 44,444

Change in accounting policy (see Note 2) – – – – – -11,937 -11,937 – -11,937

Restated balance 1,777 170,983 – 306 -11,047 -129,512 32,507 – 32,507

Changes in equity for 2008

Total comprehensive profit/(loss)for the period 115 4,181 – 194 -4,512 -7,723 -7,745 – -7,745

Transaction with owners, recorded

directly in equity

Offsetting of accumulated losses against share premium – -102,692 – – – 102,692 – – –Shares issued in connection with exercised stock options (Note 20) 46 2,127 – – – – 2,173 – 2,173Shares issued in connection with conversion of bridge loans (Note 20) 71 7,003 – – – – 7,074 – 7,074Shares issued in connection with business combinations (Note 4) 10 20,250 – – – – 20,260 – 20,260

Cost of share capital increases – -218 – – – – -218 – -218

Refund of stamp duty – 964 – – – – 964 – 964

Stock option expense – 737 – – – – 737 – 737

Total transactions with owners 127 -71,829 – – – 102,692 30,990 – 30,990

Balance at December 31, 20081 2,019 103,335 – 500 -15,559 -34,543 55,752 – 55,752

Changes in equity for 2009

Total comprehensive profit/(loss) for the period 238 10,074 – -464 -3,398 -55,696 -49,246 – -49,246

Transaction with owners, recorded

directly in equity

Offsetting of accumulated losses against share premium – -7,049 – – – 7,049 – – –Shares issued in connection with exercised stock options (Note 20) 1 48 – – – – 49 – 49Shares issued in connection with business combinations (Note 4) 2,001 86,575 – – – – 88,576 – 88,576

Cost of share capital increases – -139 – – – – -139 – -139

Stock option expense – 1,568 – – – – 1,568 – 1,568

Total transactions with owners 2,002 81,003 – – – 7,049 90,054 – 90,054

Balance at December 31, 2009 4,259 194,412 – 36 -18,957 -83,190 96,560 – 96,560


Regarding share capital see Note 20. Net reserves of approx. USD 56.6 million are not available for

distribution due to legal restrictions.



Consolidated cash flow statement

(in USD 1,000) Notes


20081 2009

Net loss for the period -7,723 -55,696

Adjustments for:Depreciation and amortisation 11,12 5,729 26,515

Impairment of intangible assets 12 491 35,476

Impairment of financial assets 13 – 1,533

Non-cash interest in connection with bridge loans 628 –

Non-cash stock option expense 737 1,568

Foreign exchange gain (net) on intercompany transactions 4 –

Increase of employee benefits 755 195

(Decrease)/increase of bad debt reserve, net -523 893

Loss on disposal of fixed assets – 97

Financial income and expenses 1,770 936

Income tax expense/(income) 667 -364

2,535 11,153

(Increase)/decrease in trade and other receivables, prepaid expenses and accrued income -745 18,107

Decrease in inventories 481 440

Increase/(decrease) in trade and other payables and accrued expenses 562 -16,646

(Decrease)/increase in deferred revenue -493 11,873

Income taxes (paid)/received -1,409 566

Net cash provided by operating activities 931 25,493

Capital expenditure for fixed assets 11 -298 -1,533

Capital expenditure for intangible assets 12 -9 -959

Capitalised development costs 12 -4,276 -4,768

Proceeds from disposal of fixed assets – 5

Decrease/(increase) in short-term investments and marketable securities 6 -4,096

Cash inflow from acquisition, net 4 42 20,965

Decrease of financial assets – 653

Interest received 124 17

Net cash used in/provided by investing activities -4,411 10,284

Repayment of borrowings -3,222 -5,530

Proceeds from borrowings – 553

Settlement of payables relating to acquisitions 4 -5,060 –

Proceeds from issue of share capital 20 2,391 49

Cost of share capital increases -218 -139

Proceeds from issue of shareholder loan 6,262 –

Proceeds from use of credit line 2,611 –

Proceeds from reimbursement of stamp duty related capital increase 610 –

Interest paid -1,311 -680

Net cash provided by/used in financing activities 2,063 -5,747

Net (decrease)/increase in cash and cash equivalents -1,417 30,030

Cash and cash equivalents at beginning of period 4,847 3,330

Effect of exchange rate fluctuations on cash and cash equivalents -100 -125

Cash and cash equivalents at end of period 3,330 33,235


These consolidated financial statements should be read in conjunction with the accompanying

notes.

Notes to the consolidated financial statements p.45

Notes to the consolidated financial statements

1 Corporate information and basis of preparation

The Myriad Group (formerly Esmertec Group) (‘Myriad’ or the ‘Group’) consists of Myriad

Group AG (formerly: Esmertec AG) (‘the Company’), incorporated on April 1, 1999 in Dübendorf,

Switzerland, and its consolidated subsidiaries. At an extraordinary meeting of shareholders on

March 18, 2009 it was decided to change the name of the ultimate holding company – Esmertec

AG – to Myriad Group AG.

Statement of compliance and basis of preparation of the consolidated financial statements

The consolidated financial statements are prepared in accordance with the International Financial

Reporting Standards (IFRS) and comply with Swiss law.

The consolidated financial statements are presented on the basis that the Group will continue as a

going concern. The Group uses the historical cost convention except for items which are required

to be accounted for at fair values. The historical cost convention assumes the realisation of

assets and the satisfaction of liabilities in the normal course of business. The Group had a net

loss of USD 55.7 million for the year ended December 31, 2009 and has incurred cumulative losses

of USD 181.0 million since foundation. Net cash provided from operations was USD 25.5 million

(2008: USD 0.9 million) for the year ended December 31, 2009. Management is targeting to

further improve the overall cost structure.

The consolidated financial statements are presented in USD, rounded to the nearest thousand.

Although the parent company is domiciled in Switzerland, the consolidated financial statements

are presented in USD since the Group’s cash inflow and outflow are dominated to a large extent

in USD. The subsidiaries prepare their individual financial statements by using the functional

currency of their respective countries.

The preparation of financial statements in conformity to IFRS requires management to make

judgments, estimates and assumptions that affect the application of policies and reported

amounts of assets and liabilities, income and expenses as well as disclosure of contingent assets

and liabilities. Although these judgments, estimates and assumptions are based on management’s

best knowledge of current events and actions, actual results ultimately may differ from those

estimates. The estimated and underlying assumptions are reviewed on an ongoing basis, and

revised if necessary (see Note 3).

Principles of consolidation

The consolidated financial statements include the financial statements of Myriad Group AG, which

provides headquarter functions and also provides sales, support and engineering services, as well

as of the following companies in which Myriad Group AG directly or indirectly owns more than

50% of the voting rights or in some other way has a controlling influence, prepared in accordance

with uniform corporate accounting policies and comprising the twelve months ended December 31,

2008 and 2009.

p.46 Notes to the consolidated financial statements

CompanyShare capital (million) 2008 2009 Function

Consolidated since

Esmertec Inc., Newark, DE, USA USD 0.1 100% 100% SCreation: May 2000

OOVM A/S, Aarhus, Denmark DKK 0.5 100% 100% In liquidation

Acquisition: July 2004; inactive since operations ceased in July 2006

Myriad (China) Co. Ltd., Beijing, PRC (formerly Esmertec China Co. Ltd.) CNY 2.0 65% 100% E/S

Creation: April 2005

Myriad Technology AG, Dübendorf, Switzerland (formerly Esmertec Holding AG) CHF 1.0 100% 100% A

Creation: February 2006

Esmertec France S.A., Bagneux, France EUR 0.08 100% –5 E/SAcquisition: February 2006

Myriad Group Korea Co. Ltd., Seoul, Korea KRW 50.78 100% 100% E/SCreation: August 2006

Certoise 2G SAS, Cergy, France EUR 0.55 100% –5 E/SAcquisition: Dec 2008

Myriad France SAS, Le Bourget du Lac, France, (formerly Purple Labs SA) EUR 0.5 0% 100% E/S

Acquisition: April 20094

Certoise 3G SAS, Cergy, France EUR 8.3 0% –5 E/SAcquisition: April 20094

Myriad Group (UK) Ltd., Didsbury, UK, (formerly Purple Labs (UK) Ltd.) GBP 0.001 0% 100% A

Acquisition: April 20094

Purple Labs Trading Ltd., Hong Kong, PRC HKD 0.002 0% 100% E/SAcquisition: April 20094

Myriad Japan Inc., Tokyo, Japan JPY 5.0 0% 100% E/SAcquisition: April 20094

Purple Labs Inc., San Mateo, CA, USA USD 0.003 0% 100% E/SAcquisition: April 20094

Myriad Group Australia Pty Ltd., North Sydney, Australia AUD 0.006 0% 100% E/S

Creation: July 2009

A = Administrative

S = Sales and Support

E = Engineering services (internal/external)

1 Myriad Group (UK) Ltd.’s share capital is GBP 1.2 Purple Labs Trading Ltd.’s share capital is HKD 1.3 Purple Labs Inc.’s share capital is USD 1.4 Further information, see Note 4.5 Merged with Myriad France SAS with effect from January 1, 2009.6 Myriad Group Australia Pty Ltd.’s share capital is AUD 100.

Myriad Group AG (ticker: MYRN) is publicly traded on SIX Swiss Exchange (SIX).

In April 2009 the Group acquired Purple Labs SA, Le Bourget du Lac, France and its subsidiary

companies (see Note 4 for further details).

As at July 28, 2009, Esmertec France SA, Certoise 2G and Certoise 3G were merged into Myriad

France SAS (formerly Purple Labs SA). The merger is viewed as an internal reorganisation that

simplifies Myriad Group’s administrative Management by gathering all resources into a single entity.

Myriad Group AG further purchased the remaining 35% share capital of Myriad (China) Co. Ltd,

during 2009 (see Note 4).

Following an application in 2009, OOVM A/S has been dissolved since December 31, 2009.

Subsidiaries are all entities that Myriad Group has the ability to control. Control refers to the

power of the Group to govern, directly or indirectly, the financial and operating policies of

an entity so as to obtain benefits from its activities. Non-controlling interests are shown as a

component of equity in the balance sheet and the share of the net profit (loss) attributable to

non-controlling interests is shown as a component of the income statement.


The purchase method of accounting is used to account for the acquisition of businesses by the

Group. The cost of an acquisition is measured as the fair value of the asset given and liabilities

incurred or assumed at the date of exchange, plus directly attributable costs of the acquisition.

The excess of the cost of acquisition over the fair value of the Group’s share is recorded as goodwill.

An acquired company is part of the income statement for the period of Myriad’s ownership.

Intercompany transactions, shareholdings, balances and unrealised intercompany profits and

losses are eliminated.

Other investments:

CompanyOwnership at December 31, 2008

Ownership at December 31, 2009 Method of accounting

eFlow Inc., Tokyo, Japan, (formerly Esmertec KK) 10.76% 9.58%

“Available for sale” investment since September 2006

Javaground Inc., USA 19.99% 19.99%“Available for sale” investment since February 2006

During 2009, eFlow Inc. issued share capital to which Myriad Group did not subscribe as a result of which its shareholding has reduced.

2 Corporate accounting policies

The accounting policies used for the consolidated financial statements are consistent with those

used in the consolidated financial statements for the previous year ended December 31, 2008,

except for the change in revenue recognition and the change in disclosure of foreign exchange

results as set out below, and for the changes required by the following applicable standards and

interpretations which are mandatory for annual periods beginning on or after January 1, 2009:

New standards/interpretations

IFRS 8 – Operating Segments•

IFRIC 13 – Customer Loyalty Programmes•

IFRIC 15 – Agreements for the Construction of Real Estate•

IFRIC 16 – Hedges of a Net Investment in a Foreign Operation•

IFRIC 18 – Transfers of Assets from Customers (effective as from July 1, 2009)•

Revised standards and interpretations

IFRS 2 – Share-based Payments•

IFRS 7 – Financial Instruments: Disclosures•

IAS 23 – Borrowing Costs•

IAS 32 – Financial Instruments: Presentation•

IAS 1 – Presentation of Financial Statements•

IAS 39/IFRIC 9 – Embedded Derivatives•

Improvements to IFRSs (May 2008)•

With the exception of IFRS 8 and IAS 1 the adoption had no substantial effect on the consolidated

financial statements.

The introduction of IFRS 8 did result in a change in composition of reportable segments. Note 25

was amended in order to reflect the enhanced disclosure requirements of this standard.

The adoption of IAS 1 revised led to the additional disclosure of the statement of comprehensive

income as Myriad opted for a separate income statement.


New and revised IFRS, issued but not yet effective in 2009

The following new and revised standards and interpretations have been issued by the balance

sheet date, but are not yet effective and are not applied in these consolidated financial

statements. Their impact on the consolidated financial statements of Myriad Group has not yet

been systematically analysed. The expected effects disclosed in the table below reflect a first

assessment by Group management.

Standard/Interpretation Effective datePlanned applicationby Myriad

IFRS 3 – Business Combinations **** July 1, 2009 Reporting year 2010

IAS 27 – Consolidated and Separate Financial Statements **** July 1, 2009 Reporting year 2010

Improvements to IFRSs (April 2009) * January 1, 2010 Reporting year 2010

IAS 39 – Financial Instruments: Recognition and Measurement – Eligible Hedged Items * July 1, 2009 Reporting year 2010

IFRS 2 – Share-based Payment (Group Cash-settled Share-based Payment Transactions) *** January 1, 2010 Reporting year 2010

IAS 32 – Financial Instruments: Presentation (Classification of Rights Issues) * February 1, 2010 Reporting year 2011

IFRIC 19 – Extinguishing Financial Liabilities with Equity Instruments *** July 1, 2010 Reporting year 2011

IFRIC 17 – Distributions of Non-Cash Assets to Owners * July 1, 2009 Reporting year 2010

IFRS 9 – Financial Instruments *** January 1, 2013 Reporting year 2013

IFRIC 14 – Prepayment of a Minimum Funding Requirement * January 1, 2011 Reporting year 2011

IAS 24 – Related Party Disclosures ** January 1, 2011 Reporting year 2011

* No impact or no significant impact is expected on the consolidated financial statements of

Myriad Group.

** Mainly additional disclosures or changes in the presentation are expected in the consolidated

financial statements of Myriad Group.

*** The impacts on the consolidated financial statements of Myriad Group cannot yet be

determined with sufficient reliability.

**** This standard will have an effect on transactions after January 1, 2010.

Change in accounting policy of revenue recognition

In 2009 Myriad Group decided to change its accounting policy for recognising revenues for

committed volume contracts. While previously, revenues arising from committed volume

contracts were recognised up-front upon delivery of the master copy, and accounts receivable

were subsequently reviewed for any impairment, the revised policy leads to the recognition of

revenues when payments actually become due, based on quarterly royalty reports or any other

specific payment terms. Past experience has shown that the collectability of receivables related

to contracts with extended payment terms (due in more than 12 months) was not always reliable

and significant bad debt expenses on accounts receivable from such contracts were incurred. As

a result, Management of the Company has come to the conclusion that extended payment terms

beyond one year should be interpreted as an indicator that collectability is not deemed probable,

which is also in line with relevant US guidance related to the software industry.

Furthermore, Purple Labs SA, which came into the group with effect from April 1, 2009, has already

applied the revised policy for committed volume contracts in its previous financial statements

prepared in accordance with IFRS. Therefore Management of the Group decided to adopt the revised

policy, which it believes provides more relevant and reliable financial information.

The changed accounting policy on revenue recognition, can be found on page 55.


Change in disclosure of foreign exchange results

In 2009 Myriad Group decided to change its disclosure of foreign exchange results. Whilst

previously foreign exchange gains were disclosed in financial income and foreign exchange losses

were disclosed in the financial expense lines of the consolidated income statement, the Group now

discloses the net foreign exchange result in the corresponding financial income or expense line.

Impacts of the changes in accounting policies

The change of the accounting policy for revenue recognition in respect of committed volume

contracts and for disclosure of foreign exchange results were adopted retrospectively as of

January 1, 2008 and had the following impact on the Group’s consolidated financial statements:

Restated balance sheet as per January 1, 2008

in USD 1,000As originally

publishedChange in

accounting policy Restated

Trade accounts receivable 28,402 -16,458 11,944

Income tax payable -2,563 2,409 -154

Advances received – -3,864 -3,864

Accrued expenses -11,507 6,008 -5,499

Deferred revenue -2,301 -32 -2,333

Net effect of restatement on equity -11,937

Equity attributable to owners of the parent company -44,444 11,937 -32,507

Restated income statement for the year ended December 31, 2008

in USD 1,000 (except for share information)As originally

publishedChange in


Licence revenue 22,364 1,237 23,601

Cost of licence revenue -4,108 -1,770 -5,878

Bad debt expense 1,280 -757 523

Financial income 9,720 -9,635 85

Financial expense -11,805 8,421 -3,384

Income tax expense -957 290 -667

Net loss -5,509 -2,214 -7,723

Attributable to

– Owners of the parent company -5,509 -2,214 -7,723

Basic and diluted loss per share -0.27 -0.10 -0.37

Restated balance sheet as per December 31, 2008

in USD 1,000As originally

publishedChange in


Trade accounts receivable 26,189 -16,129 10,060

Income tax receivable 2 855 857

Prepaid expenses and accrued income 6,667 -1,689 4,978

Income tax payable -2,241 2,109 -132

Advances received – -3,521 -3,521

Accrued expenses -10,500 4,497 -6,003

Deferred revenue -1,841 -273 -2,114

Net effect of restatement on equity -14,151

Equity attributable to owners of the parent company -69,903 14,151 -55,752


Foreign currency translation

Transactions in foreign currencies are recorded at the rate of exchange at the date of the

transaction. Any difference in exchange rates between the original transaction date and the

subsequent settlement date is recorded in the income statement as a gain or loss.

Monetary assets and liabilities in foreign currencies are translated at year-end rates and related

unrealised gains and losses are recognised in the income statement. Non-monetary assets and

liabilities are translated at the exchange rate prevailing at the date of transaction.

The Group uses US dollar (USD) as the reporting currency. USD is the currency of reference in

terms of market pricing, and the majority of the Group’s sales transactions are denominated in

USD. For reporting purposes the financial statements of entities denominated in currencies other

than the USD are translated as follows:

Assets and liabilities: year-end rates

Share capital and equity: year-end rates

Income statement: average rates

Cash flow statement: average rates

The resulting translation adjustments – other than those relating to the cash flow statement – are

recorded in other comprehensive income until disposal of the foreign entity.

Translation adjustments on long-term loans to foreign entities that in substance form part of

the net investment in the foreign entity are also classified as equity in changes in fair value of

financial assets until disposal of the net investment. Upon disposal of a net investment, all related

cumulative translation adjustments are recognised in the income statement.

The following rates were used to translate the financial statements of the Group’s entities into

USD for consolidation purposes:

2008 2009

Average rate Closing rate Average rate Closing rate

CHF 0.9264 0.9473 0.9232 0.9636

DKK 0.1973 0.1895 0.1872 0.1927

JPY 0.0097 0.0111 0.0107 0.0108

EUR 1.4712 1.4097 1.3940 1.4333

CNY 0.1441 0.1467 0.1466 0.1467

KRW 0.0009 0.0008 0.0008 0.0009

AUD 0.8530 0.6907 0.8842 0.8931

GBP 1.8554 1.4479 1.5653 1.5928

HKD 0.1284 0.1290 0.1290 0.1290

Cash and cash equivalents

Cash and cash equivalents are stated at nominal value. They include cash on hand, bank accounts,

fixed term deposits or call deposits with an insignificant risk of change in value and original terms

of less than 3 months.

Short-term investments and marketable securities

Short-term investments are primarily call deposits with maturities between 90 and 180 days at the

time of investment and are stated at nominal value, which approximates to their fair value.

Marketable securities are investments in highly-liquid debt-based mutual funds (“Sicav

monétaire”) in France, with maturities between 90 and 180 days at the time of investment, and are

stated at nominal value, which approximates to their fair value.


Accounts receivable

Accounts receivable are stated at contracted amounts less any allowance for doubtful receivables.

Additions to the provision for bad debts are made based on the specific identification of accounts

where collection is considered to be at risk. Accounts receivable are checked on a regular

basis. As soon as there are indications, such as feedback obtained from account managers and

other personnel in direct contact with the customer, payment history of the customer, updated

credit rating reports and information available in the market, that there is a position at risk,

Management decides on the necessary level of the provision.

The provision for bad debts is reduced when the account is recovered or written off.

Inventory

Inventory comprises principally capitalised work in progress related to service projects. Revenue

on fixed price service projects, for which the Group’s non-recurring engineering contracts typically

are incurred, is recognised upon completion of specific contractual milestone events, or based

on an estimated percentage of completion as work progresses. Work in progress is measured at

cost plus profit recognised to date less progress billings and recognised losses. Cost includes all

expenditure related directly to specific projects and an allocation of fixed and variable overheads

incurred in the Group’s contract activities.

It also includes purchased licences for Java technologies stated at the lower of cost and net

realisable value. Net realisable value is the estimated selling price less the estimated cost of

completion and selling expenses.

The cost of inventory is based on the first-in-first-out principle and includes costs incurred in

acquiring the inventory and bringing it to its present location and condition.

Non-current assets “held for sale” and discontinued operations

Non-current assets and disposal groups classified as “held for sale” are stated at the lower of the

carrying amount and fair value less costs to sell.

Non-current assets are classified as “held for sale” if their carrying amount will be recovered

principally through a sale transaction rather than through continuing use. Furthermore the asset

must be available for immediate sale and the sale must be highly probable.

In 2009 and 2008, the Group held no non-current assets classified as “held for sale”.

Furniture and equipment

Furniture and equipment are stated at acquisition or manufacturing cost less related accumulated

depreciation and impairment losses. The depreciation is calculated on a straight-line basis over

the following useful lives:

Estimated useful life (years)

Furniture and other equipment 5

IT infrastructure 3

Office refurbishing 10, or for the remainder of the office lease term, if less

Cars 4

Items of furniture and equipment are eliminated from the balance sheet on their date of disposal.

Any gain or loss on disposal of such assets is recognised in the income statement as a component

of other income and expenses.


Business combinations and goodwill

Business combinations are accounted for using the purchase method. The cost of acquisition is

the cash paid plus the fair value at the date of exchange of any other purchase consideration

given in exchange for the control over the net assets of the acquired company. The cost of

acquisition also includes incidental costs directly attributable to the business combination

(“transaction costs”).

The acquired identifiable assets and liabilities are initially recognised at fair value. Goodwill is

recorded as the excess of the cost of acquisition over the Group’s interest in the fair value of

identifiable net assets acquired.

Regardless of whether the Group acquired 100% or a lower percentage of an entity while

obtaining control, the assets and liabilities acquired are recognised at 100% of their fair value.

Non-controlling interest therefore is recorded as the minority’s proportion of the fair value of

assets and liabilities acquired. Goodwill is not amortised but tested for impairment annually or

whenever an indication of impairment exists.

Other intangible assets

Intellectual property, licences, patents, trademarks and similar rights are stated at acquisition cost

less related accumulated amortisation and impairment losses. The amortisation is calculated on a

straight-line basis over the following useful lives:

Estimated useful life (years)

Software product licence 5

Acquired intellectual property 5

Acquired customer base 5

Trademark 5

Openwave existing technologies 5

Openwave IPR&D technologies 7

Sagem existing technologies 2.5 to 3

Intangible assets are recognised separately from goodwill when they are identifiable and can be

reliably measured. Intangible assets with a finite useful life are amortised over their estimated useful

lives as stated above. Intangible assets with an indefinite useful life are not amortised but tested for

impairment annually or whenever an indication of impairment exists. The Group did not record any

intangible assets with indefinite useful lives, other than goodwill, during the periods presented.

Capitalised development costs

The Group expenses costs incurred in the preliminary project stage until technological feasibility

of the software is demonstrated and other specific criteria are met. Thereafter development costs

are capitalised.

Capitalised costs of software to be sold are carried at the lower of unamortised cost and

recoverable amount until the product is released to customers, at which time capitalisation ceases

and costs are amortised on a straight-line basis over the estimated life of the product (3 years).

Government grants

Government grant income is spread on a straight line basis over the duration of the related

R&D programme. Any refundable grant is recorded as a repayable government loan.


Impairment of fixed and intangible assets

The carrying amounts of the Group’s non-current assets are reviewed at each annual balance sheet

date, or earlier if any significant event has occurred, to determine whether there is any indication of

impairment of value. If any such indication exists, the asset is reviewed for impairment. Goodwill and

capitalised development costs not yet available for use are tested for impairment every year.

An impairment loss is recognised in the income statement whenever the carrying amount of an

asset or its cash-generating unit exceeds its recoverable amount. Recoverable amount is the

higher of fair value less costs to sell and the assets’ or group of assets’ value in use. In assessing

value in use, the estimated future cash flows are discounted to their present value based on the

risks specific to the asset(s).

An impairment loss is reversed if there is an indication that the impairment loss may no longer

exist and there has been a change in the estimates used to determine the recoverable amount.

However, an impairment of goodwill is not reversed.

Financial assets

Financial assets are classified as ‘available-for-sale’ or ‘held-to-maturity’. Held-to-maturity

financial assets are non-derivative financial assets such as advances and loans that have fixed

maturities and fixed or determinable payments and that the entity has the intent and ability

to hold until maturity. Held-to-maturity financial assets are initially recorded at fair value and

subsequently carried at amortised costs using the effective interest rate method. All other

assets are considered to be available-for-sale financial assets with initial recognition at fair

value. Changes therein, other than impairment losses, and foreign exchange gains and losses

on available-for-sale monetary items, are recognised directly in other comprehensive income.

When an investment is derecognised or impaired, the cumulative gain or loss is transferred to the

income statement.

Interest-bearing loans and borrowings

Interest-bearing loans and borrowings are recognised initially at fair value less attributable

transaction costs. Subsequent to initial recognition, interest-bearing borrowings are stated at

amortised cost with any difference between cost and redemption value being recognised in the

income statement over the period of the borrowings using the effective interest method.

Convertible bonds that can be converted to share capital at the option of the holder, where the

number of shares issued does not vary with changes in their fair value, are accounted for as

compound financial instruments. The fair value of the liability portion of a convertible bond is

determined using a market interest rate for an equivalent non-convertible bond. This amount is

recorded as a liability on an amortised cost basis until extinguished on conversion or settled on

maturity of the bonds. The remainder of the proceeds is allocated to the conversion option, which

is recognised and included in shareholders’ equity.

Transaction costs that relate to the issuance of the convertible bond are allocated to the liability

and equity components in proportion to the allocation of proceeds.

Interest-bearing loans and borrowings are classified as current liabilities unless the Group has

an unconditional right to defer settlement of the liability for at least 12 months after the balance

sheet date.

Provisions and deferred revenue

A provision is recognised when the Group has a legal or constructive obligation as a result of a past

event, and it is probable that an outflow of economic benefits will be required to settle the obligation.

The Group defers revenues when revenue recognition criteria are not satisfied for the respective

element(s) of the transaction. The Group also defers revenues related to upfront invoicing of


support and maintenance services, recognising the revenue on a straight-line basis over the

maintenance contract period.

Pension liabilities

Group pension funds in favour of employees are maintained in the United Kingdom (UK), the

United States of America (USA), China, France and Switzerland. They comply with the respective

legislation in each country and are financially independent of the Group. The pension funds are

generally financed by employer and employee contributions. In the case of the UK, USA and China

pension plans, which are accounted for as defined contribution plans, employer contributions paid

or due are recognised in the income statement as incurred.

The Swiss pension plan qualifies as a defined benefit plan. The plan offers a choice of either an

annual Swiss pension amounting to an average of 6.8% of the accumulated retirement capital or

a lump sum payment of the accumulated retirement capital. Other benefits include a disability

pension amounting to 40% of the insured salary, death benefits, as well as related benefits

in respect of the participants’ children. The defined benefit obligation “DBO” is calculated by

application of the projected unit credit method. The respective pension obligations and the related

plan assets are assessed annually. Current service costs are recognised in the income statement;

past service costs are recognised in the income statement on a straight-line basis over the

period until the benefits become vested. Actuarial gains and losses are recognised in the income

statement on a straight-line basis over the average remaining service years to the extent that they

exceed 10% of the fair value of plan assets or the present value of the DBO, whichever is higher.

Any surplus is only capitalised if it is actually available to the Group in the form of expected

refunds from the fund or reductions in contributions to the fund.

The French pension plan also qualifies as a defined benefit plan. The plan comprises an

employment indemnity whereby employees are entitled to a capital remittance from the company

when they retire under French law. The indemnity is based on the salary, the number of years

service and the age of an employee.

Income taxes

Current income tax payable is the expected tax payable on the taxable profit using tax rates

enacted at the balance sheet date.

Deferred tax is calculated by applying the balance sheet liability method on the temporary

differences between the carrying amount and the tax base of assets and liabilities.

Calculation of deferred tax is based on the applicable, enacted or substantially enacted tax rate

of the respective entity. Deferred tax assets on losses carried forward and deductible temporary

differences are recognised only to the extent that it is probable that future profits will be available

to utilise the deferred tax asset.

Deferred tax assets and liabilities are offset when the Group has a legally enforceable right to

offset current tax assets and liabilities, the deferred tax assets and liabilities relate to the same

taxation authority, and net settlement is intended.

Share-based payment transactions

Employees (including Senior Executives and members of the Board of Directors) receive

remuneration in the form of stock options.

Myriad Group recognises share-based payments to employees classified as equity-settled

transactions, such as stock options issued for services received, as compensation expense with

a corresponding increase in equity. The fair value of the stock options is measured initially at

grant date and is expensed on a straight-line basis over the period during which the employees

become unconditionally entitled to the options, known as the vesting period. The fair value of


stock options is measured using a binomial model, taking into account the terms and conditions

upon which the options were granted. The amount recognised as expense is adjusted to reflect the

actual number of stock options that are expected to vest.

Revenue recognition

The Group recognises revenue when all of the following conditions are satisfied: persuasive

evidence of an agreement exists, delivery has occurred, the fee is fixed or determinable, and

collectability is deemed probable.

A) Licence revenue

The general revenue recognition criteria set out above are applied as follows with respect to

licence revenues:

•Persuasive evidence of an agreement: Myriad considers signed contracts and purchase orders

as adequate documents that provide persuasive evidence of the existence of an arrangement. If

standard practice includes use of signed contracts, then persuasive evidence is provided only by

a contract signed by both parties. If it is a client’s business practice to use only purchase orders,

then evidence must specify governing terms and conditions.

•Delivery must have occurred: Myriad considers the delivery to have occurred upon the transfer

of the product master or first copy, in the case of products sold in the Device Solutions Division,

or upon formal customer acceptance, in the case of products sold in the Mobile Services

Division. Any contracts that provide for the delivery of future software, other than unspecified

upgrades or enhancements, are additional elements and are recorded as deferred revenue.

After delivery, if uncertainty exists about customer acceptance of the software, recognition of

licence revenue is deferred until acceptance occurs.

•Fees must be fixed or determinable: In the Device Solutions Division, Myriad considers a fee

to be fixed or determinable if the amount of the unit fee and number of copies is defined in the

contractual agreement with the customer. In the Mobile Services Division, the fee is considered

to be fixed when the capacity level and related price has been agreed.

•Collectability must be probable: Myriad has a close relationship with its customers and

carefully monitors their creditworthiness. Collection is deemed probable if Myriad expects that

the customer will be able to pay amounts under the arrangement as payments become due.

If Myriad determines that collection is not probable, revenue is deferred and recognised upon

cash collection.

Device Solutions DivisionStandard terms of the licence agreements for the Device Solutions Division require the licencee

to document the total number of shipments of products incorporating Myriad’s technology and

report this data to Myriad on a quarterly basis.

A majority of contracts irrevocably commit the customer to a guaranteed minimum order over a

specified term of typically two to three years. Committed volume contracts include a fixed fee and

require payment throughout the life of the contract generally based on quarterly royalty reports,

whereby any amount not consumed by the customer will become due at the end of the contract.

Other committed volume contracts provide for fixed installment payment terms. While the first

three of the above four revenue recognition criteria are met at the inception of the committed

volume contract when the delivery of the master copy of the software takes place, the fourth

criterion – collectability – is not deemed probable in the case of contracts with payment terms that

extend beyond one year. Based on past experience and the nature of the contractual cash flows

of such contracts, the Group recognises revenues when payments become due, i.e. based on the

quarterly royalty reports or any other specified payment terms.


Licence agreements pursuant to which customers commit to purchase Myriad’s software for a

specified period of time but that do not specify minimum purchasing requirements are referred

to as duration contracts. Duration contracts also include a fixed fee, which is based on the

number of shipments. Under duration contracts, customers report the number of devices shipped

incorporating Myriad software on a quarterly basis, and are invoiced for licence fees accordingly.

Revenue is recognised under such contracts based upon the quarterly royalty reports.

Mobile Services DivisionStandard terms of the licence agreements for the Mobile Services Division call for the sale

of a licence which permits a server to manage up to a specified number of Unstructured

Supplementary Service Data (USSD) messages per second, known as capacity-based licences.

These licences are sold to mobile operators as part of a turnkey solution, which includes

installation and other services. Myriad recognises revenue from the sale of its capacity-based

software licences upon formal acceptance of the full solution by the customer. Installation and

other services are accounted for separately.

In addition, Myriad recognises all of the costs related to the sale of such licences, including the

cost of licences and selling expenses, at the time revenue is recognised.

B) Service revenue

Service revenue consists of non-recurring engineering, installation, training, consulting, and

technical support services. Revenue on fixed price projects, for which Myriad’s engineering

services contracts typically are incurred, is recognised upon completion of specific contractual

milestone events, or based on an estimated percentage of completion as work progresses.

Estimated losses on fixed-price service arrangements are recognised immediately when it

becomes apparent a loss will be incurred. After such a determination, it is possible that actual

losses realised will be greater than the estimate previously recorded. These differences could be

material. Revenue from training and consulting service elements is generally recognised as the

services are performed. Maintenance contracts include second level support to the customer and

there is generally a time and response commitment made to the customer to resolve software

issues. Maintenance revenue is recognised on a straight-line basis over the period of the contracts.

Segment reporting

Previously reportable segments were determined in accordance with IAS 14. As of January 1, 2009

the Group determines and presents operating segments under IFRS 8. An operating segment is

a component of the Group that engages in business activities from which it may earn revenues

and incur expenses, including revenues and expenses that relate to transactions with any of the

Group’s other components. In accordance with the management structure and the reporting

made to the Board of Directors (the Group’s Chief Operating Decision Maker), the reportable

segments are the two business units “Device Solutions Division” and “Mobile Services Division”.

Segment accounting is prepared up to the level of EBITDA because this is the key figure used for

management purposes. All operating assets and liabilities that are directly attributable or can

be allocated on a reasonable basis are reported in the respective business unit. No distinction

is made between the accounting policies of segment reporting and those of the consolidated

financial statements.

3 Significant accounting judgments and estimates

In the process of applying the Group’s accounting policies, management has made the following

judgments and assumptions which have a significant effect on the amounts recognised in the

financial statements:


Allocation of purchase price to identifiable intangible assets and goodwill; assessment of impairment of these assets

In the context of the acquisition of a business, the allocation of the purchase price to the fair

value of net assets acquired requires significant judgment in the estimation of the future cash

flows associated with the intangible assets acquired. In subsequent periods, the estimates of cash

flows must continue to be reviewed and updated in order to determine whether any impairment of

the intangible assets recorded has occurred. Actual outcomes could vary significantly from such

estimates of discounted future cash flows and could result in shortened useful lives or impairment.

The net carrying amount of goodwill, intellectual property and customer base is USD 97.9 million

at December 31, 2009, as disclosed in Note 12.

Capitalisation of development costs

After the technical feasibility of in-house developed software has been demonstrated, Myriad

capitalises the related development costs until such time as the customer product incorporating

the software is commercialised. However, there can be no assurance that such products will

complete the development phase or will be commercialised or that market conditions will not

change in the future requiring a revision of management’s assessment of such future cash flows

which could lead to additional amortisation or impairment charges.

In light of the increasing pace of technological changes, Management has reduced the estimated

useful life of capitalised development costs from 5 years to 3 years from January 1, 2009. This

change in the accounting estimate increased the amortisation in the year ended December 31,

2009 by USD 2.9 million (included in ordinary amortisation in Note 12).

The Group has capitalised development costs with a net value of USD 7.1 million at December 31,

2009 as disclosed in Note 12.

Estimated useful life of intangible assets

These assets are amortised over an estimated useful life of usually 5 years. This estimate is based

on the Company’s operating experience. As the Company continues to evolve, it is possible that

product life cycles may shorten which could have the impact of shortening the amortisation

period in the future and could increase amortisation accordingly. The net carrying values of the

Group’s intangible assets are disclosed in Note 12.

Stock option expense

The determination of the value of stock options granted to employees, senior management and

members of the Board of Directors requires Management to make numerous estimates regarding

employee turnover, expected share price volatility and other inputs to the binomial model used

for calculation.

Income taxes

At December 31, 2009, the net liability for current income taxes is USD 0.9 million and the net

liability for deferred income taxes is USD 6.2 million as disclosed in Note 24. Current tax liabilities

are measured on the basis of an interpretation of the tax regulations in place in the relevant

countries. Management believes that the estimates are reasonable and that the recognised assets

and liabilities taking into account income tax-related uncertainties are adequate. Various internal

and external factors may have favourable or unfavourable effects on the income tax assets and

liabilities. The adequacy of this interpretation is assessed by the tax authorities in the course of

the final assessment or tax audits. This can result in material changes to tax expense.

Furthermore, in order to determine whether tax loss carry forwards may be carried as an asset,

it is first necessary to critically assess the probability that there will be future taxable profits

against which to offset them. This assessment depends on a variety of influencing factors and

developments. Changes in these factors may have a material effect on the tax expense.


Pension liabilities

The Swiss and French pension plans qualify as defined benefit plans. The determination of

the recognised assets and liabilities from these plans are based upon statistical and actuarial

calculations. Mainly the present value of the defined benefit obligation is impacted by assumptions

on discount rates used to arrive at the present value of future pension liabilities, and assumptions

on future increases in salaries and benefits. Furthermore, the Group’s independent actuaries use

statistically based assumptions covering areas such as future withdrawals of participants from the

plan and estimates on life expectancy. The actuarial assumptions used may differ materially from

actual results due to changes in market and economic conditions, higher or lower withdrawal rates

or longer or shorter life spans of participants and other changes in the factors being assessed.

These differences could impact the assets or liabilities recognised in the balance sheet materially

in future periods. At December 31, 2009 the recognised pension liability is USD 1.4 million as

disclosed in Note 18.

4 Acquisitions and disposals

Purple Labs SA

On February 13, 2009, Myriad Group and Purple Labs SA, Le Bourget du Lac, France, a company

developing and marketing mobile device software including mobile browsers and messaging,

announced that they had reached agreement on the acquisition by the Company of all outstanding

shares in Purple Labs SA, in an all-share transaction. Previously, with effective date as of

December 31, 2008, Purple Labs SA had acquired from Sagem Wireless SA, Paris, France, its

3G mobile platform business by acquiring all outstanding shares in Certoise 3G SAS, Cergy, France.

The parties agreed in a contribution agreement that the shareholders of Purple Labs SA receive

19,658,132 shares with a nominal value of CHF 0.10 each in the Company as a consideration for

1,666,486 shares with a nominal value of EUR 0.37 each in Purple Labs SA. The shares were created

in an ordinary share capital increase by resolution of the Board of Directors at April 17, 2009. As at

April 17, 2009 the shares of the Company were traded at CHF 4.05 on SIX Swiss Exchange.

The contribution agreement also included an earn-out clause that would provide Purple Labs SA

shareholders a further 4,368,474 shares with a nominal value of CHF 0.10 each of the Company

if specified targets for 2009 revenue and gross profit margin were achieved. In addition, the

Purple Labs SA management options scheme was converted to 1,457,997 Company options. This

would grow by a further 323,999 free shares and Company options if the earn-out is achieved. As

the Board of Directors at the start of the initial recognition believed that the earn-out would be

reached, the earn-out was taken into account in the purchase price allocation. As the conditions

(revenue and gross margin targets) were achieved in 2009, the earn-out clause shares were issued

on March 29, 2010 (see Note 30).

Purple Labs SA was included in the consolidation of the Group as from April 1, 2009.


The acquisition had the following provisional effect on the Group’s assets and liabilities:

Effect of the acquisition on April 1, 2009 in USD 1,000

Book value (pre-acquisition)

Fair value adjustments Fair value

Cash and cash equivalents 22,183 22,183

Trade accounts receivable 4,314 4,314

Other receivables 19,857 19,857

Furniture and equipment 550 550

Openwave existing technologies 21,287 7,067 28,354

Openwave IPR&D technologies – 16,511 16,511

Sagem existing technologies – 6,476 6,476

Other intangible assets 1,219 1,219

Other financial assets 475 475

Trade accounts payable -2,715 -2,715

Other payables -25,285 -25,285

Interest-bearing loans and borrowings -7,051 -7,051

Deferred revenue -11,916 -11,916

Employee benefits -386 -386

Deferred tax liabilities -6,557 -6,557

Net assets acquired at April 1, 2009 22,532 23,497 46,029

Goodwill 43,765

Total purchase price 89,794

Settled by: – payment with shares 88,576

– paid transaction costs 1,218


Paid in cash in 2009 -1,218

less cash acquired 22,183

Cash inflow from acquisition in 2009, net 20,965

The calculation of the fair value of the identifiable assets and liabilities and therefore of the

goodwill at the time of the acquisition, was performed by independent valuation experts.

The identifiable intangible assets consist primarily of the acquired technology. The acquired

technology was measured by projecting the technology specific revenue and applying the

Discounted Cash Flow method for calculating the fair value. Deferred taxes on the valuation

differences resulting from the purchase price allocation were calculated at a tax rate of 34.4%.

The goodwill of USD 43.8 million arising from the acquisition amounts to 49% of the purchase

price and essentially reflects the value of the expected value added to the Myriad product

portfolio including synergies and the value of the acquired workforce.

Other receivables and other payables had to be changed due to income and costs being

reallocated to the pre-acquisition period. The net assets acquired have increased by

USD 1,048,000 from the provisional table presented at the Half Year.

On a pro forma basis, had Purple Labs SA been acquired as at January 1, 2009, the revenue for the

year ended December 31, 2009 would have been USD 125.8 million and the net loss USD 51.4 million.

While this acquisition did not have any effect on the result of the comparative period, revenues

and net loss were affected during the year ended December 31, 2009, by USD 60.8 million and

USD -11.6 million respectively.


Asset deal Xumii Inc.On August 6, 2009 the Group acquired certain assets of Xumii, a privately-held software company

providing mobile and web-based social networking services. In connection with the acquisition,

the Group entered into an Asset Purchase Agreement (the “APA”) between Myriad Group AG,

Dübendorf, Switzerland and Myriad Group Australia Pty Ltd., Sydney, Australia (a 100 percent

subsidiary of Myriad Group AG incorporated July 30, 2009) together the “Purchasers”, and

Xumii Australia Pty Ltd., Sydney, Australia, Xumii IP Pty Limited, Sydney, Australia and Xumii Inc,

San Mateo, CA, USA, together the “Sellers”. Additionally, the Group entered into employment

agreements with 17 Xumii staff.

Tangible and intangible assets of USD 5,000 and USD 395,000 respectively were acquired and

paid in cash.

The transaction did not have a material impact on merged revenue or EBITDA for the full fiscal

year 2009.

Esmertec China Co., LtdThe Company held 65% of Esmertec China Co. Ltd. as of January 1, 2009, which was incorporated

on April 18, 2005. This entity is fully consolidated from the date of acquisition.

With effect from registration date September 4, 2009, the Company purchased the remaining

35% of the equity interest owned by a founding member of the Company at a price of

USD 234,892 (RMB 1,600,000).

Owing to the change in the business outlook, the Company had to take an impairment charge

which has been recognised in the income statement in 2009, relating to goodwill acquired. This

impairment loss is wholly related to the Device Solutions Division.

Acquisitions of previous years and earn-out payments

Certoise 2G SAS

On July 31, 2008, Myriad announced that it had entered into a framework agreement to acquire

Sagem Mobiles’ software platform activities. The parties agreed that the shareholders of the

software platform activities to be sold (which were transferred to a new legal entity, named

Certoise 2G SAS and owned by Sagem Wireless SA, Paris, France) would receive as consideration

3,210,790 shares in the Company. Such shares were created by capital increase (conversion of

authorised capital into ordinary capital) by resolution of the Board of Directors of the Company

of December 31, 2008 and according to the contribution agreement entered into between the

Company and Sagem Wireless SA, Paris, France on December 23, 2008, the Company received

55,379 shares with a nominal value of EUR 10.00 each in Certoise 2G SAS, Paris, France in

consideration for 3,210,790 shares in the Company with a nominal value of CHF 0.10 each. As at

December 31, 2008 the shares of the Company were traded at CHF 6.40 on SIX Swiss Exchange.

The equivalent of the Company’s shares provided to Sagem Wireless SA therefore amounted to

USD 19,466,000 (CHF 20,549,056).

The share capital increase was registered in the Commercial Registry of the Canton of Zurich as at

January 7, 2009. The capital increase is shown as an increase of share premium in shareholders`

equity as at December 31, 2008. As at January 7, 2009, the amount of USD 304,158 (CHF 321,079)

was reclassified as share capital.


The acquisition had the following effect on the Group’s assets and liabilities in the year 2008:

Effect of the acquisition on the year ended December 31, 2008 in USD 1,000

Book value (pre-acquisition) Fair value

Cash and cash equivalents 52 52

Other receivables 17 17

Accrued income & prepaid expenses 1,581 1,581

Tangible assets 729 729

Intellectual property 19,007 19,007

Accrued expenses -1,112 -1,112

Pension liability -574 -574

Net assets acquired at December 31, 2008 19,700 19,700

Goodwill 779


Settled by: – payment with shares 19,466

– paid transaction costs 10

– accrued liability 1,003


Paid in cash in 2008 -10

Less cash acquired 52

Net cash inflow 2008 42

No fair value adjustments were required due to the fact that the net assets were contributed by

the seller on December 31, 2008 at fair value to Certoise 2G and Certoise 2G was subsequently

sold to Myriad Group.

The goodwill arising from this acquisition reflects mainly the value of expected specific synergies

and the acquired workforce.

Certoise 2G SAS was fully consolidated in Myriad Group with an effective date of December 31,

2008.

Esmertec France SA (formerly Cellicium SA)On February 10, 2006, Myriad acquired 100% of the shares of Esmertec France SA (formerly

Cellicium SA), a French software and services company, for a total purchase price of EUR 22.9 million

(USD 27.0 million), including transaction costs. The transaction resulted in a net cash outflow in

2006 of EUR 11.4 million (USD 14.4 million).

In January 2007, it was determined that the portion of the purchase price for Esmertec France SA

which was based on 2006 performance criteria had been fully earned. The total amount due for

this earn-out payment was USD 7.5 million (EUR 5.9 million), of which USD 6.3 million was paid in

cash and USD 1.2 million was paid by the issuance of 154,032 shares of Myriad Group AG.

In 2008, it was determined that the portion of the purchase price which was based on 2007

performance criteria had also been fully earned. The total amount due for this earn-out payment

was USD 5.6 million, of which USD 5.1 million was paid in cash and USD 0.8 million was paid by the

issuance of 102,258 shares of Myriad Group AG.

As at July 28, 2009, Esmertec France SA was merged with other French legal entities (Certoise 2G

and Certoise 3G) into Myriad France SAS (formerly Purple Labs SA).


5 Cash and cash equivalents

At December 31,

(in USD 1,000) 2008 2009

Cash at banks and petty cash 3,330 33,235

Total 3,330 33,235

6 Short-term investments and marketable securities

At December 31,

(in USD 1,000) 2008 2009

Fixed term deposits 417 4,718

Total 417 4,718

7 Trade accounts receivable

At December 31,

(in USD 1,000) 20081 2009

Gross amount 12,597 12,075

Individual value adjustment -2,537 -3,371

Total 10,060 8,704

By region

EMEA 8,202 5,613

America 719 1,566

APAC 403 1,487

Japan 736 38


At December 31,

Ageing of net trade receivables:

2008 Gross

including individual value adj.

2009 Gross

including individual value adj.

not yet due 7,563 5,880

1-30 days overdue 1,054 692

31-60 days overdue 658 727



more then 120 days overdue 256 995

Total 10,060 8,704


Development of allowance for bad debts:

(in USD 1,000) 20081 2009

Recognised allowance for bad debts beginning of year 3,074 2,537

Additional provisions 377 998

Unused provision reversed -900 -105

Translation adjustments -14 -59

Recognised allowance for bad debts at end of year 2,537 3,371

8 Other receivables

At December 31,

(in USD 1,000) 2008 2009

VAT receivables 487 400

Other receivables 161 880

Withholding tax receivable 1,146 2,129

Receivable from Sagem Wireless 1,581 –

R&D tax credit receivable – 2,849

Total 3,375 6,258

The total balance of other receivables as at December 31, 2009, includes financial assets of

USD 880,000 (2008: USD 1,742,000).

9 Inventory

At December 31,

(in USD 1,000) 2008 2009

Hardware & software 356 651

Work in progress 932 213

Total 1,288 864

Work in progress relates to contracted services for customers. No allowances have been recorded

for obsolete or slow-moving inventory. The recoverability of all inventory items is regularly tested.

10 Prepaid expenses and accrued income

At December 31,

(in USD 1,000) 20081 2009

Prepaid licence and service fees 515 567

Accrued income 3,138 7,083

Transaction costs Purple Labs 714 –

Accrued interest income 128 –

Other prepaid expenses 483 1,162

Total 4,978 8,812


Accrued income at December 31, 2009 relates to customer royalty reports from duration contracts

received but not yet billed and licence income not yet invoiced.


11 Furniture and equipment

Purchase cost (in USD 1,000) Furniture

IT infrastructure

Office refurbishing

Other equipment Cars Total

Balance per 31.12.2007 171 962 620 229 126 2,108

Additions 1 264 8 25 – 298

Disposals -5 -84 -29 -6 -51 -175

Change in scope of consolidation:

Certoise 2G – Acquisition – – – 729 – 729

Translation adjustments -1 -21 18 -4 10 2

Balance per 31.12.2008 166 1,121 617 973 85 2,962

Additions 461 149 914 9 – 1,533

Disposals -96 – -166 -4 -45 -311


Purple Labs – Acquisition 220 17 313 – – 550

Translation adjustments 19 12 16 28 1 76

Balance per 31.12.2009 770 1,299 1,694 1,006 41 4,810

Accumulated depreciation FurnitureIT

infrastructureOffice

refurbishingOther

equipment Cars Total

Balance per 31.12.2007 90 513 268 171 62 1,104

Additions 23 278 125 40 24 490

Disposals -2 -62 -24 -4 -32 -124

Translation adjustments 1 -12 13 1 6 9

Balance per 31.12.2008 112 717 382 208 60 1,479

Additions 419 151 401 224 17 1,212

Disposals -44 – -121 -3 -41 -209

Translation adjustments -1 11 13 17 2 42

Balance per 31.12.2009 486 879 675 446 38 2,524

Net book value per 31.12.2008 54 404 235 765 25 1,483

Net book value per 31.12.2009 284 420 1,019 560 3 2,286

The Group did not have any capital commitments relating to the acquisition of furniture and

equipment, other than the amounts recognised as liabilities on the balance sheet, as at December 31,

2009.

The fire insurance value of tangible fixed assets amounts to USD 8,843,500 at December 31, 2009

(2008: USD 1,677,000).


12 Intangible assets

Purchase cost (in USD 1,000) Goodwill

Software product licences

Intellectual property

Customerbase

Capitalised development

costs Trademark Total

Balance per 31.12.07 27,046 511 13,563 6,316 17,238 81 64,755

Additions – 9 – – 4,276 – 4,285

Purchase price adjustment Esmertec (China) Co. Ltd. -1,500 – – – – – -1,500

Derecognition – -77 -5,419 – -1,022 – -6,518


Certoise 2G – Acquisition 779 – 19,007 – – – 19,786

Translation adjustments -360 35 298 -216 925 -3 679

Balance per 31.12.08 25,965 478 27,449 6,100 21,417 78 81,487

Additions 2351 329 395 – 4,768 – 5,727

Derecognition – – – – -1,367 – -1,367


Purple Labs SA – Acquisition 43,765 370 52,190 – – – 96,325

Translation adjustments 6,174 50 2,863 93 441 1 9,622

Balance per 31.12.09 76,139 1,227 82,897 6,193 25,259 79 191,794

Accumulated amortisation(in USD 1,000) Goodwill

Software product licences

Intellectual property

Customer base

Capitalised development

costs Trademark Total

Balance per 31.12.07 2,975 398 10,967 2,579 8,612 32 25,563

Additions – 77 1,085 1,165 2,896 16 5,239

Impairment – – – – 491 – 491

Derecognition – -77 -5,419 – -1,022 – -6,518

Translation adjustments 142 29 287 -39 441 -11 849

Balance per 31.12.08 3,117 427 6,920 3,705 11,418 37 25,624

Additions – 194 18,136 1,104 5,854 15 25,303

Impairment 29,991 – 3,537 – 1,948 – 35,476

Derecognition – – – – -1,367 – -1,367

Translation adjustments 199 20 569 86 316 10 1,200

Balance per 31.12.09 33,307 641 29,162 4,895 18,169 62 86,236

Net book values per 31.12.2008 22,848 51 20,529 2,395 9,999 41 55,863

Net book values per 31.12.2009 42,832 586 53,735 1,298 7,090 17 105,558

1) Consists of goodwill paid in connection with the purchase of 35% share in Myriad (China) of TUSD 235 (See Note 4).


GoodwillGoodwill has been allocated to the Group’s cash generating units (“CGU”) which are identical to the Group’s operating segments. The following cash generating units have significant carrying amounts of goodwill:

At December 31,

(in USD 1,000) 2008 2009

Device Solutions Division 4,320 34,006

Mobile Services Division 18,528 8,826

Total amount of goodwill 22,848 42,832

Goodwill impairmentThe Device Solutions Division performed strongly in 2009. Whilst future changes to the mobile industry both in terms of new entrants and technologies represent both opportunity and risk to the Device Solutions Division, the Company had to record an impairment in order to reduce the historic carrying value of intangibles.

In the case of the Mobile Services Division, the financial performance in 2009 was poor relative to previous years. Whilst Myriad believe there are positive prospects for a turnaround in performance following reorganisation of the Division’s leadership and sales teams, the Company has taken an impairment to the carrying value of intangibles to accurately reflect the current business concerns.

By recording these impairments Management’s intention is to ensure Myriad has more sustainable levels of goodwill going forward.

After a review of the latest market conditions and consideration of the appropriate parameters to be applied in the calculation of future discounted cashflows, an impairment charge to goodwill of USD 29,991,000 had to be recorded. Of this, USD 20,178,000 related to the Device Solutions Division and USD 9,813,000 related to the Mobile Services Division.

Impairment testThe group of intangible assets of each CGU, including allocated goodwill, is tested for impairment on at least an annual basis. The value in use is thereby determined based on future discounted cash flows.

As a basis for the calculation, the three-year mid-term operating plan is used. Subsequent years are included in the calculation using a perpetual annuity. The projections are based on knowledge and experience and also on judgments made by Management as to the probable economic development of the relevant companies.

Consequently, it is assumed that for all CGU, there are no planned significant changes in their organisation. The underlying projections for the next three years are therefore calculated based on historical figures and the latest market estimates.

The discount rates used are based on the Group’s weighted average cost of capital adjusted for specific risks of the different CGU’s associated cash flow projections. Since the cash flows also take into account tax expenses, a post-tax discount rate is utilised. Use of the post-tax discount rate approximates the results of using a pre-tax rate applied to pre-tax cash flows. Pre-tax discount rates are at 19.1% for the Device Solutions Division and at 20% for the Mobile Sevices Division.


Following parameters have been used for the calculations:

2008 2009

Discount rate:

Growth rate (residual

value): Discount rate:

Growth rate (residual

value):

Device Solutions Division 13.9% 1.0% 14.1% 3.0%

Mobile Services Division 12.4% 1.0% 14.1% 1.0%

The increased 3% Device Solutions Division (DSD) growth rate reflects Management’s assessment of the long-term growth outlook arising from exploitation of DSD’s broad portfolio of acquired and capitalised intangible assets (post the acquisition of Purple Labs). The lower Mobile Services Division growth (MSD) rate of 1% reflects Management’s expectation of more modest growth arising from MSD’s relatively narrower portfolio of acquired and capitalised intangible assets.

Sensitivity analyses of goodwill related to the Device Solutions Division:

Amount of excess (+)/necessary impairment (-) in USD million depending on

Growth/Discount Rate 12.06% 13.06% 14.06% 15.06% 16.06%

0% -0.10 -6.50 -11.50 -15.80 -19.60

1% 4.10 -2.60 -8.30 -13.10 -17.30

2% 9.90 2.00 -4.50 -10.00 -14.60

3% 16.90 7.60 – -6.30 -11.60

4% 25.60 14.30 5.30 -2.00 -8.00

5% 36.80 22.80 11.90 3.20 -3.90

As an example: If a discount rate of 13.06% and a growth rate of 3% were applied in the

calculation – the recoverable amount would be higher than the carrying amount of the goodwill

of the CGU by USD 7.6 million.

Sensitivity analyses of goodwill related to the Mobile Services Division segment:

Amount of excess (+)/necessary impairment (-) in USD million depending on

Growth/Discount Rate 12.06% 13.06% 14.06% 15.06% 16.06%

0% 3.50 1.70 0.20 -1.10 -2.20

1% 4.50 2.50 0.80 -0.60 -1.90

2% 5.60 3.40 1.50 -0.10 -1.40

3% 7.00 4.40 2.30 0.60 -0.90

4% 8.80 5.70 3.30 1.40 -0.30

5% 11.00 7.40 4.50 2.30 0.40

IP impairment

After a review of the latest market developments and the current expectations and requirements

of our customers in China, Management had to revise the future business projections.

As the discounted cashflows were below the carrying value of recognised intellectual property,

an impairment loss of USD 3,537,000 was recorded relating to IP acquired at the acquisition of

Coretek (Myriad China), which is wholly related to the Device Solutions Division.

Capitalised development costs

The total amount of development cost capitalised during the year ended December 31, 2009

amounted to USD 4,768,000 compared to USD 4,276,000 for the year ended December 31, 2008.


In 2008 and 2009 after a review of the latest market developments and the expectations and

requirements of the customers in terms of improved products and new technology, Management

decided that certain products or components of the existing software have become obsolete and

that some development projects should be discontinued. In addition, in light of the increasing pace

of technological change, Management reduced the estimated life of capitalised development costs

from 5 years to 3 years from January 1, 2009. This change in accounting estimate increased the

amortisation in the year ended December 31, 2009 by USD 2.9 million.

These events and decisions triggered new estimations of future cash flows related to Myriad’s

acquired and internally developed intangible assets. Such future cash flows, discounted to present

value, were compared to the carrying value of the related intangible assets. Where the discounted

cash flows were below the carrying value, an impairment loss was recorded.

In total an impairment loss of USD 1,948,000 (2008: USD 491,000) was recorded which has been

allocated entirely to the Device Solutions Division.

The Group did not have any commitments for the acquisition of intangible assets, other than

amounts recognised as liabilities on the balance sheet, as at December 31, 2009.

13 Long-term investments and other financial assets

At December 31,

(in USD 1,000) 2008 2009

Assets held to maturity

Security deposits 460 1,043

Total assets held to maturity 460 1,043

Loans and receivables

Loan to eflow Inc. (formerly Esmertec KK) 653 –

Advances to Javaground USA Inc. 1,100 –

Total loans and receivables 1,753 –

Assets available for sale

Investment in eflow Inc. (formerly Esmertec KK) 542 416

Investment in Javaground USA Inc. 814 –

Total assets available for sale 1,356 416

Total 3,569 1,459

In February 2006, Myriad announced a 19.99% investment in Javaground USA Inc. USA, a California-

based company focusing on porting and testing games for mobile telephones. The investment was

made for USD 444,000 (including transaction costs of USD 44,000). In addition, Myriad agreed

to provide a loan of up to a total of USD 1.6 million to help fund Javaground’s working capital

requirements. The loan bears interest at 4% per annum and the principal is due to be redeemed

by February 2010. However Management consider it to be unlikely that the loan and accrued

interest will be repaid. Given the uncertainty in the economic outlook for Javaground, Management

decided to write off the loan and investment of USD 2 million (including foreign currency translation

movements in 2009). Thereof USD 464,000 were recycled out of other comprehensive income

(reclass adjustment) and USD 1,533,000 is shown as financial expenses.

In November 2008, Esmertec KK merged with Ubion and Websoft International. The name of the

new company is eflow Inc. and Myriad’s interest in the new company after the merger is 10.76%.

In 2009 a share capital increase took place in eflow where Myriad did not participate. As a

consequence the Group’s interest has decreased to 9.58%.


The investment in Javaground Inc. and eflow Inc. (formerly Esmertec KK) are classified as “available

for sale”. The market value of the assets is determined on every balance sheet date based on future

discounted cash flows taking into consideration the latest operational business plans.

Other financial assets include the rent deposits for offices in Dübendorf, in the UK and in Asia,

totalling USD 1,043,000 (2008: USD 460,000). The deposits bear interest at current market rates.

14 Accrued expenses

At December 31, 2009, accrued expenses include the cost of Java licences of USD 0.5 million

(2008: USD 4.5 million) with respect to revenue from the resale of Sun licences already

recognised. Accrued expenses also include accrued employee bonuses, commissions and social

benefits and other accruals relating to the operating business.

15 Restructuring and integration costs

Following the acquisition of Purple Labs, Management decided to reorganise and restructure Myriad

Group. This resulted in a reduction of the sales force and support effort in the Java business, and

the elimination of certain middle Management roles in the product and services organisation.

These restructuring costs primarily comprise final compensation for terminated employees as well

as consulting fees related to the process and costs of terminated leases.

The restructuring and integration cost amounting to USD 7.5 million consist of USD 3.7 million for

integration and USD 3.8 million for personnel measures.

16 Interest bearing loans and borrowings

(in USD 1,000)

At December 31,

2008 2009

Convertible bonds 2,734 1,431

Short-term loan 947 4,160

Loan “Pensionskasse SAir Group” 78 41

Credit line from financial institution 2,611 16

Repayable government loans – 3,007

Total 6,370 8,655

Total current portion of interest-bearing loans and borrowings (1 year or less) 5,000 4,985

1 – 2 years 1,370 1,205

2 – 5 years – 2,465

Total non-current portion of interest-bearing loans and borrowings 1,370 3,670

Total interest-bearing loans and borrowings 6,370 8,655

Interest-bearing loans and borrowings consist of the following:

Credit facility

At December 31, 2009, Myriad France SA (formerly Cellicium SA) has a bank credit line of

USD 705,000 (EUR 500,000) with an indefinite duration with a notice period of 60 days which

was not used.


Convertible bonds

In 2004 and 2005 Myriad issued convertible bonds with a total face value of CHF 33.850 million

and CHF 3.175 million respectively. The convertible bonds partly matured in September 2008 and

2009, and pay interest at a rate of 4.25% per annum on the face value of the notes. The holders

have, since March 30, 2006, been entitled to convert the notes into shares at a fixed price. To the

extent the bonds are not converted by the maturity date, Myriad is required to redeem the bonds

at the principal amount plus a premium of 18.5%.

Amendments to convertible bonds:In March 2007, amendments to existing debt agreements were proposed. Convertible noteholders

representing 90.57% of the total convertible bond principal agreed to the amendments.

The following terms and conditions were amended:

Conversion price and maturity dates:For one third of the bond principal, the conversion price was reduced from CHF 16.20 to CHF

13.00 and in exchange the maturity date on this third was extended one year beyond the original

maturity date. For the second third of the bond principal, the conversion price was reduced

from CHF 16.20 to CHF 11.00 and the maturity date was extended by two years after the original

maturity date. The conversion price and maturity date have remained unchanged for the final

third of the bond principal.

Non-conversion premium:For the third of the bond principal which has had its maturity date extended one year beyond the

original maturity date, the non-conversion premium increased from 18.5% to 23.5%. For the third

where the maturity date was extended by two years, the premium increased from 18.5% to 28.5%.

Myriad had the option to either repay a portion of or the total of the unconverted balance of the

note on the original maturity dates, with the approval of the bondholders, and with the payment of

the non-conversion premium.

These substantial modifications of the terms and conditions were accounted for by derecognising

the original financial liability and recognising a new financial liability at the point in time when

the amendment occurred. The difference of USD 1,067,000 between the carrying amount of the

existing liability and the fair value of the new liability was recognised as financial income in the

statement of operations in 2007.

The fair value of the new liability component was calculated using the effective interest rate of the

bonds. The residual amount of USD 534,000 for this newly issued convertible bond representing

the value of the equity conversion component was recognised in shareholders’ equity within share

premium in 2007.

Conversion of convertible bonds:In October 2007, Myriad made an offer to the noteholders, which was valid until November 30,

2007, giving them the option to convert their notes immediately at a lower conversion price.

Convertible noteholders representing 81% of the original convertible bond principal accepted

the offer.

The offer consisted of the following terms and conditions:

For bondholders accepting the offer, the conversion price was reduced to CHF 10.00, from a

previous average conversion price of CHF 13.08. For all other bondholders the original terms and

conditions remained unchanged.


This amendment to the terms, which induced early conversion and resulted in an additional

consideration being paid, was accounted for when the terms of the convertible debt instrument

were amended and the bondholders officially accepted the offer. The number of ordinary shares

which were to be issued to the noteholders who accepted this offer, on conversion under the

original conversion terms was 2,291,325. Due to the reduction in the conversion price, 706,173

additional shares were issued with a total value of USD 5,890,948 (CHF 6,630,964) representing

a market share price of CHF 9.39 at the point in time when the noteholders accepted the offer.

This incremental consideration was recognised as a loss in the statement of operations in 2007.

The carrying amount of the existing liability of USD 8,345,000 (CHF 9,393,000) was reduced

to its fair value at the date of conversion of USD 6,832,000 (CHF 7,689,820); the difference of

USD 1,513,000 (CHF 1,704,000) was recognised directly within equity. In total, and after including

the adjustment for the release of the deferred tax liability relating to the conversion of USD

175,000 (CHF 197,000), a net amount of USD 7,579,000 (CHF 8,532,000) was recognised directly

in equity.

In total USD 26,630,000 (CHF 29,974,080) of the original face value in the amount of USD

32,893,010 (CHF 37,025,000) of the convertible note were finally converted in December 2007,

leading to an increase in share capital in the amount of USD 266,000 (CHF 300,000) and an

increase in share premium in amount of USD 26,109,000 (CHF 29,386,896) net of stamp duty in

the amount of USD 255,000 (CHF 287,184).

In 2009 the Company paid CHF 1,626,000 (USD 1,570,000) as redemption of bonds.

The total remaining value of the convertible bond recognised in the balance sheet as at

December 31, 2009 is USD 1,431,000 (2008: USD 2,734,000). This amount will be due on

September 30, 2010.

The convertible bonds recognised in the balance sheet at December 31, 2009 are as follows:

(in 1,000) CHF USD

Face value 37,025 29,223

Transaction costs -1,069 -845

Equity component -2,173 -1,713

Liability component on initial recognition 33,783 26,665

Amendment of Convertible Bond (2007) -2,141 -1,741

Conversion of Convertible Bond (2007) -31,678 -28,143

Redemption of Convertible Bond (2008) -3,646 -3,222

Conversion to short term loan (2008) -1,000 -947

Redemption of Convertible Bond (2009) -1,626 -1,570

Interest expenses incurred in 2004 849 688

Interest expenses incurred in 2005 3,547 2,840





Interest paid -5,803 -4,782

Thereof included in accrued expenses -203 -196

Translation adjustment – 4,043

Liability component at December 31, 2009 1,485 1,431

The interest expense on the bond is calculated using the effective interest rate method by

applying the effective interest rate of 11% to the liability component. Interest expense recognised

in 2009 totalled USD 322,000 (2008: USD 678,000).


The convertible notes are subject to generally accepted market cross default clauses, under which

the amounts outstanding can become due, if the Company or one of its significant subsidiaries is

asked for an early repayment of another financial liability due to non-compliance with credit terms.

Short-term loan

The short-term loan as shown on December 31, 2009 is denominated in USD and bears interest at

a rate of 11.5%. The loan was entered into by Purple Labs to finance the acquisition of Openwave.

The prior year loan was repaid. USD Nil (2008: USD 421,000) of the short term loan at December

31, 2009 is due to shareholders of Myriad Group AG. Total interest paid to related parties in

the year ended December 31, 2009, is USD Nil (2008: USD 28,000) and total interest expenses

recognised is USD Nil (2008: USD 28,000).

Loan “Pensionskasse SAir Group”

The loan from Pensionskasse SAir Group is unsecured, denominated in CHF and bears interest at a

rate of 7%. This loan was granted to finance the leasehold improvements of the offices in Dübendorf.

Repayable government loans

In 2008, Myriad France joined a French R&D programme which will last for a period of 30 months.

In 2009, it received two instalments totalling EUR 793,426 from the French government including

EUR 373,680 (USD 524,872) that would be repayable if the resulting technology were successfully

commercialised, and is therefore shown – together with an amount of USD 2,482,000 which was

received prior to the acquisition – as repayable loan.

17 Other payables

(in USD 1,000)

December 31,

2008 2009

VAT and other non income tax related payables 1,400 1,576

Other payables 2,420 10,905

Total 3,820 12,481

The total balance of other payables as reported per December 31, 2009 is including financial

liabilities in the amount of USD 10,905,000 (2008: USD 2,420,000) of which USD 9,064,000 is

mainly linked to social costs incurred through the Purple Labs acquisition.

18 Employee benefits and related cost

The following disclosures, unless otherwise stated, relate to the Swiss and French pension plans,

which qualify as funded defined benefit plans.


Defined benefit obligation and plan assets as at the balance sheet date:

(in USD 1,000) 2008 2009

Present value of obligations, beginning of period 3,956 4,934

Current employer service cost 422 403

Interest cost 151 212

Employee contributions 333 260

Benefits paid 49 91

Insurance premiums -172 -135

Actuarial gain on obligations -82 -177

Effect on plan settlement – -1,522

Effect on plan curtailment – -415

Net transfers – 285

Liabilities assumed in a business combination – 386

Translation adjustment 277 50

Present value of obligations, end of period 4,934 4,372

Fair value of plan assets, beginning of period 2,892 2,718

Expected return on assets 124 95

Employer contributions -333 1,581

Employee contributions 333 260

Benefits paid 49 91

Insurance premiums -172 -135

Actuarial (loss)/gain on plan assets -359 173

Effect of plan settlement – -1,522


Fair value of assets, end of period 2,718 3,330

Present value of net obligation 2,216 1,042

Unrecognised cumulative actuarial loss, net -392 -21

Recognised pension liability of defined benefit plans 1,824 1,021

Recognised pension liability of defined contribution plans 709 360

Recognised pension liability 2,533 1,381

Experience adjustments:

(in USD 1,000) 2005 2006 2007 2008 2009

Present value of defined benefit obligation -4,659 -6,294 -3,956 -4,934 -4,372

Fair value of plan assets 3,160 4,374 2,892 2,718 3,330

Underfunding -1,499 -1,920 -1,064 -2,216 -1,042

Experience (losses) gains on plan assets (amount) 371 -116 -48 -359 173

Experience losses (gains) on plan liabilities (amount) -35 11 -25 -10 -30


Pension cost:

(in USD 1,000)

For the year ended December 31,

2008 2009

Current employer service cost 422 403

Interest cost 151 212

Expected return on plan assets -124 -95

Effect of plan curtailment – -415

Net periodic pension cost of defined benefit plans 449 105

Cost of other defined contribution plans 1,279 1,642

Total pension cost for the year 1,728 1,747

The Group expects net periodic pension costs in 2010 from defined benefit plans of some CHF

436,000 (USD 420,000). The expected employer contributions for defined benefit plans for the

next year are CHF 248,000 (USD 239,000).

Movements of recognised pension liability:

(in USD 1,000) 2008 2009

Recognised pension liability of defined benefit plans at the beginning of period 961 1,824

Company’s net periodic pension cost 449 105

Employer contributions 333 -1,581

Net transfers – 285

Liabilities assumed in a business combination – 386


Recognised pension liability of defined benefit plans at the end of period 1,824 1,021

Recognised pension liability of other defined contribution plans 709 360

Recognised pension liability 2,533 1,381

The following are the principal actuarial assumptions, used for the calculation of the defined

benefit obligation as well as the net periodic pension cost for the above stated periods:

Assumptions as of (in %)

December 31, 2008

December 31, 2009

Discount rate 3.6 3.8

Long-term rate of return on plan assets 3.3 3.5

Expected rate of salary increases 2.5 1.9

Expected rate of pension increases 0.5 0.5

Actual loss/return on plan assets was as follows: -8.8 8.4

Asset allocation of defined benefit plan:

(%)December 31,

2008expected return

in 2008December 31,

2009expected return

in 2009

Equity securities 17.8 5.80 18.8 6.40

Debt securities 62.1 2.10 60.9 2.25

Real estate 7.5 2.70 9.0 3.90

Other 12.6 0.70 11.3 1.20

Total 100 2.60 100 3.10


19 Deferred revenue

(in USD 1,000)Deferred revenue

Thereof current

Thereof non-current

Balance at December 31, 20071 2,332 2,332 –

Revenue deferred 15,101

Revenue recognised -15,632

Translation adjustment 313


Revenue deferred 60,873

Revenue recognised -38,932

Translation adjustment 2,571



Deferred revenue includes amounts invoiced to customers, for which the revenue recognition

criteria, as discussed in the Corporate Accounting Policies, Note 2, have not been met with respect

to the revenue element to which the amounts relate. Deferred revenue primarily consists of

undelivered future service and support to be provided within less than 12 months.

20 Share capital

The Company’s shares are registered shares with a nominal value of CHF 0.10 each. The

movements in issued share capital for the years ended December 31, 2008 and 2009 are as follows:

2008 2009

Share capital tableNumber

of sharesShare capital (USD 1,000)

Number of shares

Share capital (USD 1,000)

Issued capital at January 1, 20,006,797 1,777 21,308,584 2,019

Event:

Shares issued through exercise of stock options 479,384 46 14,631 1

Shares issued in connection with business combinations 102,258 10 22,868,922 2,001

Shares issued in connection with the redemption of bridge loans 720,145 71 – –

Translation adjustment – 115 – 238

Issued capital at December 31, 21,308,584 2,019 44,192,137 4,259

Thereof treasury shares 20 – 20 –

Authorised capital at December 31, 3,745,922 355 4,373,743 421

Conditional capital at December 31, 2,237,206 212 4,475,592 431

Shares issued through exercise of stock options

During 2009, 14,631 stock options were exercised resulting in net proceeds to the Company of

CHF 50,764 (USD 48,050). During 2008, 479,384 stock options were exercised resulting in net

proceeds to the Company of CHF 2,251,000 (USD 2,173,000).

Shares issued in connection with business combinations

In February 2008, the Company issued a total of 102,258 shares out of the authorised share

capital in connection with the acquisition of Esmertec France SA (formerly Cellicium SA) for the

settlement of a part of the second earn-out portion of the purchase price of USD 794,000 to the

former shareholders of Esmertec France SA (see Note 4).


In December 2008 the Company increased its share capital out of the authorised share capital

by 3,210,790 shares in connection with the acquisition of Certoise 2G. The capital increase was

recognised at January 7, 2009 (see Note 4).

In April 2009 the Company increased the share capital by a total of 19,658,132 shares in

connection with the acquisition of Purple Labs SA (see Note 4).


At December 31, 2009, the authorised share capital comprises 4,373,743 shares which the Board

of Directors is entitled to issue at its discretion until June 30, 2010.

In February 2008, the Company issued out of the authorised share capital a total of

102,258 shares in connection with the acquisition of Esmertec France, for the settlement of

a part of the second earn-out portion.

At the Annual General Meeting of shareholders held in May, 2008, the shareholders voted to

increase the authorised share capital by CHF 200,000 (2,000,000 shares of CHF 0.10 each). The

subscription rights of the shareholders are excluded to the extent the authorised share capital is

used to offer a shareholding interest to Myriad’s business partners of strategic importance or to

make strategic moves.

In the second quarter of 2008, important strategic financial business partners granted bridge

loans denominated in EUR and CHF in a total amount of USD 6,262,000 bearing 5.5 per cent

interest per annum. These bridge loans were repayable

on or before September 1, 2008 (first maturity date), together with an amount corresponding to •

10 per cent as an additional charge on the outstanding amount,

on or before March 31, 2009 (second maturity date), together with an additional charge of •

20 per cent of the then outstanding loans and interest accrued,

or later, together with an additional charge of 30 per cent of the then outstanding loans and •

interest accrued.

The repayment could be effected in either cash or by issuance of new shares out of authorised share

capital. The decision to issue new shares was taken by the Board of Directors at June 13, 2008.

Thus, Myriad increased its ordinary share capital by a nominal amount of CHF 72,014.50 by

issuing 720,145 new shares at a price of CHF 10.00 each to repay in full the bridging loans of

CHF 7,201,450 (USD 7,074,000) including the 10 per cent additional charge in the amount of

CHF 650,000 (USD 628,000).

According to the resolution of the extraordinary shareholders meeting of the Company

of December 15, 2008, the authorised capital was further increased by CHF 241,334.20

(2,413,342 shares of CHF 0.10 each).

At the extraordinary general meeting of shareholders held on March 18, 2009, the shareholders

voted to increase the authorised share capital by CHF 383,861.10 to a total amount of CHF

437,374.30 (4,373,743 shares of CHF 0.10 each). The Board is entitled to issue this authorised

capital until June 30, 2010, with the discretion to determine the issue price, the date for

entitlements to dividends and the type and amount of contribution to be made for such shares.

The subscription rights of the shareholders are excluded to the extent the authorised share capital

is used to offer a shareholding interest to Myriad’s business partners of strategic importance or to

make acquisitions. Subscription rights which are not exercised are at the disposal of the Board of

Directors who may use them in the interest of the Company.




voted to increase the conditional share capital by CHF 175,301.70 and at the ordinary general

meeting of shareholders held on May 19, 2009, by a further CHF 50,000 to a total amount of

CHF 449,022.30 (4,490,223 shares of CHF 0.10 each).

The conditional share capital decreased in 2009 by 14,631 shares due to the exercise of stock options.

Of the remaining conditional capital of CHF 447,559.20 as at December 31, 2009 (4,475,592

shares of CHF 0.10 each), CHF 377,059.00 is reserved for the exercise of stock option rights

which may be granted to members of the Board of Directors (“Board”), employees of Myriad and

its subsidiaries as well as members of an Advisory Board (not established) under Myriad’s stock

option plan(s) as approved by the Board. The subscription rights of the shareholders with respect

to these shares are excluded.

The remaining CHF 70,500.20 of Myriad’s conditional capital is reserved for the exercise

of conversion rights which are granted to various investors under the terms of Convertible

Notes Purchase Agreements. The conversion rights are exercisable until September 30, 2011 at

the latest. The subscription rights of the shareholders with respect to these shares are excluded.

21 Earnings/(loss) per share

Earnings/(loss) per share reported was calculated as follows:

(in USD 1,000, except per share amounts)


20081 2009

Net loss for the year attributable to owners of the parent company -7,723 -55,696

Weighted average of ordinary shares outstanding during the year 20,756 37,901

Aggregate number of equivalent ordinary shares for purpose of calculating the basic and diluted loss per share 20,756 37,901

Loss per share (in USD):

– basic -0.37 -1.47

– diluted -0.37 -1.47


Due to the fact that the Group incurred net losses during the years presented, the potential

ordinary shares from options granted to employees (total potential shares at December 31, 2008

and 2009, respectively: 1,119,000 and 2,702,000) and from convertible bonds (total potential

shares at December 31, 2008 and 2009, respectively: 243,000 and 94,885) did not have any

dilutive effect on the Group’s loss per share.


22 Employee compensation and benefits

(a) Personnel expenses

Personnel expenses included in cost of revenue as well as in other operating expenses consisted

of the following:

Employee compensation and benefits

(in USD 1,000)


2008 2009

Salaries and wages 19,540 42,034

Social taxes 3,293 8,303

Pension cost (see Note 18) 1,728 1,747

Capitalised development expenses -4,276 -4,768

Other personnel related costs 555 2,281

Recruitment costs 301 107

Stock option expenses 737 1,568

Total expenses 21,878 51,272

Included in personnel expenses shown above are the following amounts in respect of

remuneration for senior management and members of the Board of Directors, defined as key

management.

Remuneration:

December 31, 2008 December 31, 2009

For the year ended (in USD 1,000)

Annual salary Bonus

Expense allowance

Options (at fair value) Total

Annual salary Bonus

Expense allowance


Key management 1,479 824 123 355 2,781 3,174 1,537 91 1,329 6,131

Total 1,479 824 123 355 2,781 3,174 1,537 91 1,329 6,131

Indirect benefits:



Social insurance Pensions

Taxpaid Total

Social insurance Pensions

Taxpaid Total

Key management 167 87 – 254 502 102 82 686

Total 167 87 – 254 502 102 82 686

In 2009 remuneration and indirect benefits to the key management included the cost of the

settlement agreement related to the departure of the former CEO and CFO of USD 524,155.

Furthermore an immediate full vesting for all stock options was granted and the time limit to

execute the options already vested, which is normally 90 days, was extended to 360 days. Such

modifications of the terms of stock option plans led to no accounting adjustments in 2009.


Remuneration of non-executive members of the Board of Directors:



Annual Salary


Annual Salary


Board of Directors – 126 126 – 388 388

Total – 126 126 – 388 388

Other legally required disclosures on key management compensation is included in the Notes to

the Statutory Financial Statement of Myriad Group AG.

(b) Stock option plans

All employees of Myriad Group are eligible to receive stock options.

Options granted prior to the listing of the Company’s shares on SIX Swiss Exchange had exercise prices

based on the valuation of the Company in previous rounds of private financing. Options granted since

the listing on the SIX Stock Exchange had exercise prices equal to the market price of the shares on

the date of grant. All options grant employees the right to purchase one Myriad share per option and

are exercisable after the vesting period is satisfied. The Compensation and Nomination Committee

reviews and is the competent body for approving the grant of employee options.

In general, the contractual life of the options is 10 years from the grant date.

The stock option plan for directors, senior management and other key employees in place since

May 23, 2002 has been amended on September 22, 2009 and an additional option plan for free

shares was put in place on October 20, 2009.

The stock options are granted at regular Board meetings at strike price equivalent to the stock

market closure price of the Company shares on the grant day, respectively for free shares at a

strike price of zero. The subscription ratio is 1:1.

For eligible persons being granted with Stock options for the first time, 1/3 of the options

vest 12 months after the grant date and 1/36 vests on each of the 24 consecutive months.

For subsequent grants the one year restriction period does no longer apply.

With respect to free shares (strike price equivalent to zero) a vesting period of two years applies

followed by a blocking period of two years.

Options that were granted under option plans of Purple Labs SA were converted into options

under the Company’s option plan according to the rules set forth in the relevant agreements

entered into the framework of the acquisition of Purple Labs SA by Myriad Group AG

(Esmertec AG) with Purple Labs SA.

All outstanding options are covered by the conditional share capital.


The following table details the movements of outstanding employee stock options from January 1,

2008 until December 31, 2009:

(in 1,000) 2008 2009

Opening balance as per January 1, 1,744 1,119

Granted 252 2,048

Exercised -479 -15

Cancelled and expired -398 -450

Ending balance as per December 31, 1,119 2,702

– Thereof vested and exercisable 547 717

Weighted average price of options exercised CHF 8.31 CHF 4.73

Weighted average fair value of options granted CHF 3.39 CHF 2.00

Exercise prices for options outstanding at year-end CHF 0.10 – 18.60 CHF 0.00 – 18.60

The following table summarises the employee stock options outstanding as at December 31, 2008

and 2009, respectively:

Options outstanding at December 31, 2008 (in 1,000) Exercise price

Expiry dates

2012 2013 2014 2015 2016

3 CHF 0.10 3

5 CHF 0.86 5

24 CHF 3.30 5 19

148 CHF 4.77 148

168 CHF 5.70 32 91 45

16 CHF 5.98 16

64 CHF 6.70 64

16 CHF 8.00 16

43 CHF 8.25 43

10 CHF 8.50 10

74 CHF 8.80 74

125 CHF 9.50 125

209 CHF 9.55 209

178 CHF 9.97 178

26 CHF 10.00 16 10

10 CHF 18.60 10

1,119 196 469 303 91 60


Options outstanding at December 31, 2009 (in 1,000) Exercise price

Expiry dates

2012 2013 2014 2015 2016 2019

271 CHF 0.00 271

3 CHF 0.10 3

5 CHF 0.86 5

296 CHF 3.14 296

8 CHF 3.30 4 4

155 CHF 4.45 5 150

500 CHF 4.49 500

104 CHF 4.77 104

90 CHF 4.90 90

340 CHF 5.15 340

159 CHF 5.70 32 88 39

16 CHF 5.98 16

15 CHF 6.20 15

361 CHF 6.29 361

24 CHF 6.70 24

33 CHF 8.25 33

10 CHF 8.50 10

4 CHF 8.80 4

81 CHF 9.50 81

156 CHF 9.55 156

31 CHF 9.97 31

26 CHF 10.00 16 10

8 CHF 10.15 8

6 CHF 18.60 6

2,702 136 291 109 1,605 411 150

Members of the Board of Directors held 282,000 options at exercise prices ranging from CHF 4.90

to CHF 10.00 at December 31, 2009 (2008: 300,875 options at an exercise price of CHF 5.70 to

CHF 10.00). Furthermore the time limit to execute the options already vested, which is normally

90 days, has been extended to 360 days for one member of the Board of Directors.

At December 31, 2009, executive management members held 1,016,019 options at exercise prices

ranging from CHF 3.40 to CHF 5.15 per share (2008: 529,156 options at exercise prices ranging

from CHF 3.30 to CHF 9.97 per share).

The fair value of stock options granted is estimated at the date of grant using a binomial model,

taking into account the terms and conditions upon which the options were granted. The following

table lists the inputs to the model used for the years ended December 31, 2008 and 2009:

2008 2009

Dividend yield 0.00% 0.00%

Expected volatility 39.4% 57.8%

Historical volatility 39.4% 57.8%

Risk-free interest rate 3.316% 1.68%

Expected life of option 4.25 years 5.01 years

Expected exit rate after vesting 15% 15%


The expected volatility was based on the historical volatility of a selection of comparable

companies, due to the short trading history of Myriad; reflecting an assumption that this will be

indicative of future trends for Myriad, which may not necessarily be the actual outcome.

The expense for employee services received is recognised over the vesting period. The amount of

stock option expense recognised in 2009 was USD 1,568,000 (2008: USD 737,000).

23 Financial income/expenses

(in USD 1,000)


20081 2009

Interest income 84 121

Other financial income 1 35

Financial income 85 156

Interest expenses -1,855 -928

Other financing costs -846 -164

Impairment of financial assets (see Note 13) – -1,533

Foreign exchange losses -683 -574

Financial expenses -3,384 -3,199

Total, net -3,299 -3,043

1 Restated – see Note 2

24 Income taxes

Income tax expense can be analysed as follows:

(in USD 1,000)

December 31,

20081 2009

Current income tax 1,244 1,128

Deferred income tax -577 -1,492

Total income tax expense/benefit 667 -364

Deferred tax assets recognised in shareholders’ equity – –



Deferred tax assets and liabilities

Effects of temporary differences and tax loss carry forwards that give rise to significant

components of deferred tax assets and deferred tax liabilities are as follows:

(in USD 1,000)


Deferred tax assets

Deferred tax liabilities

Deferred tax assets

Deferred tax liabilities

Intangible assets 765 9,603

Intercompany accounts 882 491

Loans and borrowings 15 53

Trade accounts receivable 280 761

Accrued income and prepaid expenses 113

Deferred revenue 241 217

Trade accounts payable -485

Accrued expenses 146

Pension liabilities -389 -34

Other -9 7 -6 11

Tax loss carry forwards -820 -4,514

Total 1 -1,218 2,303 -5,039 11,282

Offset 1,218 -1,218 5,039 -5,039

Net deferred tax liabilities – 1,085 – 6,243

1) The deferred tax assets/liabilities are calculated at the respective closing date rate whereas the changes in temporary differences in the previous table showing the components of income tax expense are calculated at the average rate of the respective year.

Net operating loss carry forwards

The tax loss carry forwards structured by expiry date are as follows:

(in USD 1,000) 2) Expiry date

December 31,

2008 2009

2009 8,508 –

2010 15,051 13,778

2011 9,559 8,565

2012 18,437 16,625

2013 67,401 66,706

2014 16,040 16,040

2015 7,569 41

2016 – 34,248

To be carried forward unlimited 3,138 21,046

Total 145,703 177,049

Deferred tax assets on deductible temporary differences and for the carry forward of unused tax

losses are recognised to the extent of existing taxable temporary differences:

(in USD 1,000)

December 31,

2008 2009

Tax assets on tax loss carry forward2 31,196 39,541

Thereof recognised 820 4,514

Thereof not recognised 30,376 35,027

Tax assets on temporary differences not recognised 1,391 524

2) The tax losses carried forward and the deferred tax assets/liabilities are calculated at the respective closing date rate. Therefore, the movements in unrecognised tax loss carry forwards include currency conversion differences.


The Group has operations mainly in Switzerland, France, USA, China, Korea and branch offices

dispersed throughout Europe and Asia that have differing tax laws and rates. Consequently, the

effective tax rate on consolidated income may vary from year to year, according to the source of

earnings. The following table provides reconciliation between the effective income tax and the

expected income tax based on the consolidated income before taxes computed with the applicable

tax rate of the headquarters, Dübendorf (Switzerland) at each balance sheet date:

For the year ended (in USD)

December 31,

20081 2009

Loss before income taxes -7,056 -56,060

Income tax rate of Myriad Group AG 20.95% 20.85%

Expected tax benefit -1,477 -11,688

Effect of different tax rates in foreign jurisdictions 407 553

Effects increasing tax expense

Unrecognised tax losses incurred 2,134 8,564

Unrecognised deferred tax assets 9 –

Non deductible expenses – 2,903

Effect of permanent differences – 237

Withholding tax (net of tax effect) 339 812

Effects decreasing tax expense

Recognition of prior periods’ tax losses not previously recognised -311 -1,728

Effect of R&D tax credit -455 –

Other 22 -17

Effective income tax expense/benefit 667 -364


The effective tax rate differs from the expected tax rate during the periods ended December 31,

2008 and 2009, respectively, primarily due to the effect of not recognising tax loss carry forwards

on those respective dates, and additionally due to withholding taxes, which are raised on licence

fees in the source country.

25 Segment reporting

According to IFRS 8 ‘Operating segments’ the identification of the reportable segments has to

follow the Management approach. Therefore the external segment reporting corresponds to the

internal organisational and management structure, as well as to internal reports to the Chief

Operating Decision Maker (CODM) based on which performance is evaluated and resources are

allocated. The Group’s CODM is the Board of Directors of Myriad Group AG.

The following reportable segments were identified:

a) Device Solutions Division includes activities of the software platforms and middleware and

related products and services including Android and Limo platforms as well as the historical activity

of the Group before the acquisition of Purple Labs SA, namely the Jbed Java Virtual Machine and

its activities and its related products and services.

b) Mobile Services Division: The Group provides mobile operators with service platforms and

software for mass market phones. This business segment was formerly reported as “Mobile

Operator” segment. The Management decided to change the name to be more in line with the

extensive service portfolio in the Unstructured Supplementary Service Data (USSD) business

including Xumii.


Segment Information as at December 31, 2009


Mobile Services Division Total segments

Non-allocated / eliminations

Total Myriad Group

(in USD 1’000) 2008 2009 2008 2009 2008 2009 2008 2009 2008 2009

Revenue third party 24,654 92,386 16,603 12,992 41,257 105,378 – – 41,257 105,378

Revenue intra segment – 919 – – – 919 – -919 – –

Total Revenue 24,654 93,305 16,603 12,992 41,257 106,297 – -919 41,257 105,378

EBITDA and special charges

Depreciation -391 -1,134 -99 -78 -490 -1,212 – – -490 -1,212

Amortisation -3,354 -24,199 -1,885 -1,104 -5,239 -25,303 – – -5,239 -25,303

Income / (loss) from operationsbefore special charges -5,067 -8,750 1,801 -1,302 -3,266 -10,052 – – -3,266 -10,052

Impairment of intangible assets -491 -25,663 – -9,813 -491 -35,476 – – -491 -35,476

Restructuring and integration costs – –7,489 – – – -7,489 – – – -7,489

Income / (loss) from operations -5,558 -41,902 1,801 -11,115 -3,757 -53,017 – – -3,757 -53,017

Financial income – – – – – 85 156 85 156

Financial expenses – – – – – -3,384 -3,199 -3,384 -3,199

Income / (loss) before income taxes -5,558 -41,902 1,801 -11,115 -3,757 -53,017 -3,299 -3,043 -7,056 -56,060

Segment assets 43,547 114,560 33,500 17,922 77,047 132,482 8,173 39,412 85,220 171,894

Capital expenditure (excluding business combinations) -201 -2,049 -97 -443 -298 -2,492 – – -298 -2,492

Capitalised development cost 3,810 4,433 466 335 4,276 4,768 – – 4,276 4,768


The following table summarises revenue by geographic region based on customers’ location.

Geographic information

December 31,

(USD 1,000) 2008 % share 2009 % shareEMEA 25,241 61.2% 73,879 70.1%

thereof: Switzerland 577 1.4% 591 0.6%

thereof: France 5,916 14.3% 55,904 53.1%

Americas 6,229 15.1% 11,085 10.5%

thereof: United States of America 4,014 97% 9,018 8.6%

Asia Pacific 9,787 23.7% 20,414 19.4%

thereof: Korea 1,732 4.2% 11,149 10.6%

Total 41,257 100.0% 105,378 100.0%

Sagem Wireless represented approximately USD 55 million of the Group’s revenue. There is no

other single customer whose revenue amounts to 10% or more of the total revenue of the Group.

The following table summarises property, plant and equipment and intangible assets by

geographic region based on their location and allocation respectively:

December 31,

(USD 1,000) 2008 % share 2009 % shareEMEA 57,037 99.5% 107,375 99.6%

thereof: Switzerland 13,584 23.7% 8,402 7.8%

thereof: France 43,453 75.8% 89,782 83.3%

Americas 5 0% 4 0%

Asia Pacific 304 0.5% 465 0.4%

Total 57,346 100.0% 107,844 100.0%

26 Financial risk management

The following table shows the carrying amount of all financial instruments per category. They

correspond approximately to the fair value in accordance with IFRS.


(in USD 1,000) 2008 2009Cash and cash equivalents (without fixed term deposits) 3,330 33,235

Fixed term deposits 417 4,718


Other receivables 1,742 880



Loans and advances 1,753 –

Loans and receivables stated at amortised cost 21,628 55,663

Assets available for sale 1,356 416

Financial assets at market value through other comprehensive income 1,356 416

Interest-bearing loans and borrowings 6,370 8,655

Trade accounts payable 3,890 3,234

Other payables 2,420 10,905

Accrued expenses 6,003 11,032

Liabilities stated at amortised costs 18,683 33,826


With the exception of financial assets, which are immaterial to the Group, Myriad has no financial

instruments carried at fair value determined at a fair valuation method. As the only financial

instrument carried at fair value is immaterial to the Group (USD 416,000 see Note 13) the fair

value hierarchy is not disclosed.

Risk exposureThe Board of Directors bear ultimate responsibility for risk management. Management has to

ensure that adequate control processes and mechanisms are in place and that internal resources

are set aside to carry out the risk management in a efficient and effective way. Management

monitors risk management and reports to the Board on a regular basis.

The following sections provide an overview of the individual risk of the Group.

(a) Credit risk

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial

instrument fails to meet its contractual obligations.

Current bank deposits, cash equivalents and short-term investments are placed with institutions

that have a high credit rating.

Concentration of credit risk is primarily associated with trade accounts receivable. The Group has

numerous customers located in a variety of geographical regions. In 2009, Myriad Group changed

its accounting policy for recognising revenues for committed volume contracts. Previously revenues

arising from committed contracts were recognised upfront upon delivery of the software master

copy and accounts receivable were subsequently reviewed for impairment. The revised policy leads

to recognition of revenues when payments actually become due, based upon customer royalty

reports or other specific payment milestones.

This more accurate accounting policy affecting revenue recognition has reduced the Group’s

exposure to credit risk. A revenue is only recognised on the achievement of payment milestones

and based on customer royalty reports, all invoices are payable within contractual terms based on

the invoice date.

The Group establishes an allowance for bad debts that represents its best estimate

of incurred losses in respect of trade accounts and other receivables. The allowance is based

on specific loss components that relate to individually significant exposures.

The maximum credit risk on financial instruments corresponds to the carrying amount of the

individual financial assets. The maximum credit risk at the balance sheet date is as follows:

(in USD 1,000)

At December 31,

20081 2009

Cash and cash equivalents 3,330 33,235

Short-term investments and marketable securities 417 4,718


Other accounts receivable 1,742 880



Loan and advances 1,713 –

Total 20,988 55,693

1 Restated – see Note 2


(b) Liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as

they fall due. A shortage of liquid assets can occur at any point in time due to an unfavourable

development in the operation of the business.

The Group places a high priority on the monitoring of liquidity risk and takes corrective action at

an early stage to ensure financial obligations can be met as they arise. The appropriate level of

liquidity is maintained through credit lines, negotiation of terms of certain debt instruments or

further financing through major stakeholders.

The following table shows the maturity of the financial liabilities as at December 31, 2009 and

December 31, 2008:

Maturity analysis of financial liabilities as of December 31, 2009

(in USD 1,000)Carrying amount

Contractual cash flow

amount6 months

or less6 to 12

months 1-2 years 2-5 years

Financial liabilities

Bank overdraft 16 16 16 – – –

Interest-bearing loans and borrowings 8,639 9,828 2,004 4,032 1,327 2,465

Trade accounts payable 3,233 3,233 3,233 – – –

Other payables/liabilities 10,905 10,905 10,905 – – –

Accrued expenses 11,032 11,032 11,032 – – –

Total financial liabilities 33,825 35,014 27,190 4,032 1,327 2,465

Maturity analysis of financial liabilities as of December 31, 2008

(in USD 1,000)Carrying amount

Contractual cash flow

amount6 months

or less6 to 12

months 1-2 years 2-5 years

Financial liabilities

Bank overdraft 2,611 2,611 2,611 – – –

Interest-bearing loans and borrowings 3,759 4,075 947 1,541 1,587 –

Trade accounts payable 3,890 3,890 3,890 – – –

Other payables/liabilities 3,820 3,820 3,820 – – –

Accrued expenses 6,003 6,003 6,003 – – –

Total financial liabilities 20,083 20,399 17,271 1,541 1,587 –

(c) Market risk

The Group is exposed to a variety of market risks, such as the effect of changes in interest rates, changes

in foreign currency exchange rates and changes in fair values of monetary assets and current liabilities.

Interest rate riskInterest rate risk arises from movements in interest rates, which could have adverse effects on the

Group’s net income or financial position. The Group places its cash and cash equivalents primarily

in short-term interest-bearing accounts. Therefore no significant interest rate risk exposure

exists on the asset side of the consolidated balance sheet. Information on the Group’s interest-

bearing liabilities is set out in Note 16. The Group’s interest-bearing liabilities as at December

31, 2009, primarily include convertible loans that bear interest at fixed interest rates. Revenue

and operating cash flows are substantially independent of changes in market interest rates.

Management considers that the Group is not exposed to any significant risks arising from changes

in market interest rates and therefore no hedging instruments are used.


Foreign currency riskSales in the parent company generally arise in US Dollars and Euros whereas the related costs are

incurred in Swiss Francs. Sales in the Chinese subsidiary generally arise in US Dollars and Chinese

Yuan whereas their related costs are incurred in Chinese Yuan. Sales and expenses in the French

subsidiary generally arise in Euros. Operating costs in the various group companies are generally

incurred in local currencies. It is the Group’s policy not to hedge any foreign currency exposure.

Accordingly, the Group does not hold derivative financial instruments. The Group is therefore

exposed to currency risk in the normal course of business.

The table below shows the significant currency risks arising from financial instruments:

2009

(In USD 1,000) USD EUR GPB JPY AUD

Cash and cash equivalents 6,637 16,989 146 79 543

Trade receivables -576 54 – – –

Other receivables – – 365 – –

Other financial assets – – – – –

Other receivables and loans to

subsidiaries 2,697 – – 611 -118

Trade payables -122 -52 -125 – –

Other payables – – -57 – –

Accrued expenses -548 – -14 – –

Other payables and loans from subsidiaries – -1,387 – – –

Total currency exposure 8,088 15,604 315 690 425

2008

(In USD 1,000) USD EUR GPB JPY

Cash and cash equivalents 1,259 – 21 –

Trade accounts receivable 17,679 3,572 – –

Other receivables 119 539 200 9

Other financial assets 1,511 – – 242

Other receivables and loans to subsidiaries 5,315 1,570 – –

Trade accounts payable -1,359 -254 -14 -4

Other payables – -237 -4 –

Accrued expenses -4,192 -51 -100 –

Other payables and loans from subsidiaries – -666 – –

Total currency exposure 20,332 4,473 103 247

A 10% change in the exchange rates at December 31, 2009 would have increased or decreased the

net income by the amounts listed below. The assumption underlying this analysis is that all other

variables remain unchanged.

Sensitivity analysis 2009

(In USD 1,000) USD/CHF USD/EUR USD/GBP USD/JPY USD/AUD

Change +/- 10% 10% 10% 10% 10%

Positive impact on income statement 809 1,560 32 69 43

Negative impact on income statement -809 -1,560 -32 -69 -43

A 1% change in the USD or JPY exchange rates related to equity invested as per December 31,

2009 would have increased or decreased the Group’s equity by USD 4,160. The assumption

underlying this analysis is that all other variables remain unchanged.


Sensitivity analysis 2008

(In USD 1,000) CHF/USD CHF/EUR CHF/GBP CHF/TWD CHF/KRW CHF/JPY

Change +/- 10% 10% 10% 10% 10% 10%

Positive impact on income statement 2,033 447 10 2 1 49

Negative impact on income statement -2,033 -447 -10 -2 -1 -49

Capital Management

The Board’s policy is to maintain a strong capital basis so as to maintain investor, creditor and market confidence

and to sustain future development of the business.

Capital is measured based on the Group’s consolidated financial statements and monitored closely on an ongoing

basis. The target of the Group is to maintain a strong capital basis and maintain the equity ratio above 50%.

Fair ValueThe carrying amount of financial assets and liabilities not carried at fair value, approximates to fair value.

27 Operating leases

Future minimal rental payments under the equipment and facility leases at December 31, 2009 are as follows:

At December 31,

(in USD 1,000) 2008 2009

within 1 year 1,192 2,917

within 2 years 896 2,508

within 3 years 849 718



thereafter 420 –

TOTAL 4,392 6,729

28 Guarantees, pledges in favour of third parties and other contingent liabilities

The Group’s companies may grant guarantees in the normal course of business. At December 31, 2009,

performance guarantees and tender bonds had been issued to customers and prospects by the Mobile Services

Division totalling USD 522,592 (2008: USD 266,513). All such bank guarantees were secured by liens in amount

equal to the guaranteed amounts on marketable security accounts held at the issuing banks.

Further, to cover the limits of the company credit cards of Myriad Group AG, the amount of USD 28,908 (CHF

30,000) is pledged in favour of UBS AG as per December 31, 2009.

Management is not aware of any other significant commitments or contingent liabilities which have not been

disclosed in these Financial Statements.

29 Related parties

Related parties are members of the Executive Management Team, the Board of Directors and close family

members of the aforementioned parties, and shareholders holding in excess of 3% of the outstanding share

capital, as well as entities under these parties’ control.

All transactions with related parties Myriad is entering into are negotiated on an arms’ length basis.


In June 2007, Myriad signed a consulting agreement with a member of Myriad’s Board of Directors to provide

certain consulting services to Myriad, in the area of business and marketing consulting in mobile, multimedia

and mobile operator markets. During the year ended December 31, 2009 expenses recognised from this contract

totalled USD 31,850 (December 31, 2008: USD 241,850). The aforementioned Board member stepped down at

the ordinary general meeting held on May 19, 2009.

In September 2008, Myriad signed a short term consulting agreement with a member of Myriad’s Board of

Directors to provide certain services to Myriad in the area of acquisition. During the year ended December

31, 2009, expenses recognised from this contract totalled USD 18,663 (December 31, 2008: USD 127,707). The

aforementioned Board member stepped down at the ordinary general meeting dated May 19, 2009.

There were no other significant transactions with related parties during the years ended December 31, 2009 and

December 31, 2008. All transactions were carried out at arm’s length.

Key management compensation is disclosed in Note 22.

30 Post balance sheet events

The following events occurred subsequent to the balance sheet date:

On 26 January, 2010 the Board of Directors granted 150,000 stock options to employees at a strike price of CHF

4.90 per option.

As part of the Purple Labs transaction, the contribution agreement included an earn-out clause that would

provide Purple Labs SA shareholders additional 4,368,474 shares of the Company (at nominal value CHF 0.10

each) provided that specified targets for 2009 revenue and gross margin are achieved. The earn-out clause

also included free shares and Company options to the former Purple Labs SA management team and certain

key employees. As the conditions (revenue and gross margin targets) were achieved in 2009 the Company

granted 166,130 options on February 23, 2010 and the earn-out clause shares were issued on March 29, 2010.

The Board of Directors authorised these consolidated financial statements for issue on April 27, 2010. They are

subject to approval at the annual meeting of shareholders to be held on May 25, 2010.

p.92 Report regarding the Consolidated Accounts 2009

Report regarding the Consolidated Accounts 2009Report of the Statutory Auditor on the Consolidated Financial Statements to the General Meeting of

Shareholders of Myriad Group AG, Dübendorf

As statutory auditor, we have audited the accompanying consolidated financial statements of Myriad Group AG,

which are presented on page 40 to 91 and comprise the consolidated balance sheet, the consolidated income

statement, the consolidated statement of comprehensive income, the consolidated statement of changes in

equity, the consolidated cash flow statement and notes for the year ended December 31, 2009.

Board of Directors’ Responsibility

The Board of Directors is responsible for the preparation and fair presentation of the consolidated financial

statements in accordance with International Financial Reporting Standards (IFRS) and the requirements of

Swiss law. This responsibility includes designing, implementing and maintaining an internal control system

relevant to the preparation and fair presentation of consolidated financial statements that are free from

material misstatement, whether due to fraud or error. The Board of Directors is further responsible for selecting

and applying appropriate accounting policies and making accounting estimates that are reasonable in the

circumstances.

Auditor’s Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

We conducted our audit in accordance with Swiss law and Swiss Auditing Standards as well as International

Standards on Auditing. Those standards require that we plan and perform the audit to obtain reasonable

assurance whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the

consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the

assessment of the risks of material misstatement of the consolidated financial statements, whether due to

fraud or error. In making those risk assessments, the auditor considers the internal control system relevant to

the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit

procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the

effectiveness of the entity’s internal control system. An audit also includes evaluating the appropriateness of the

accounting policies used and the reasonableness of accounting estimates made, as well as evaluating the overall

presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is

sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated financial statements for the year ended December 31, 2009 give a true and

fair view of the financial position, the results of operations and the cash flows in accordance with International

Financial Reporting Standards (IFRS) and comply with Swiss law.

Report on Other Legal Requirements

We confirm that we meet the legal requirements on licensing according to the Auditor Oversight Act (AOA) and

independence (article 728 CO and article 11 AOA) and that there are no circumstances incompatible with our

independence.

In the course of our audit according to article 728a paragraph 1 item 3 CO and the Swiss Auditing Standard 890

we noted that an internal control system for the preparation of the consolidated financial statements designed

according to the instructions of the Board of Directors was adequately documented, but not implemented

related to certain aspects of the consolidation process.

Report regarding the Consolidated Accounts 2009 p.93

In our opinion, except as discussed in the preceding paragraph, an internal control system exists, which has been

designed for the preparation of the consolidated financial statements according to the instructions of the Board

of Directors.

In April 2009 Myriad Group AG acquired Purple Labs SA (see Note 4). At this subsidiary the implementation

of an internal control system relating to financial reporting for consolidation purposes has not yet been

implemented in all significant areas.

We recommend that the consolidated financial statements submitted to you be approved.

KPMG AG

Markus Forrer Urs Matter

Licensed Audit Expert Licensed Audit Expert

Auditor in Charge

Zurich, April 27, 2010

p.94 Statutory financial statements

Statutory financial statements

Myriad Group AG, Dübendorf

Balance sheet

At December 31,

(in CHF) Note 2008 2009

Assets

Current assets

Cash and cash equivalents 1,401,480 20,709,698

Trade accounts receivable due from:

- third parties 19,019,399 1,468,975

- group companies 3,610,859 829,664

Other receivables due from:

- third parties 1,533,255 1,748,104

- group companies 4,304,471 8,654

Inventory 955,101 208,861

Prepaid expenses and accrued income 4,250,368 2,108,216

Total current assets 35,074,933 27,082,172

Non-current assets

Financial assets

– Investments 3 3,180,412 3,776,185

– Value adjustment on investments -167,209 -1,167,208

– Loans to group companies 35,944,525 29,082,301

– Value adjustment on loans to group companies -4,297,675 -29,082,301

– Loans to third parties 1,850,497 1,005,843

– Value adjustment on loans to third parties – -1,005,843

– Security deposits and other financial assets 391,731 359,639

Own shares 2 2

Furniture and equipment 300,624 199,755

Intangible assets 13,126,439 5,538,297

Foundation costs 3,147,105 1,181,297

Total non-current assets 53,476,451 9,887,967

Total assets 88,551,384 36,970,139

Statutory financial statements p.95

Balance sheet

At December 31,

(in CHF) Note 2008 2009

Liabilities and equity

Current liabilities

Interest-bearing loans and borrowings due to: 4

– third parties 4,549,840 1,246,650

– shareholders 375,000 –

Trade accounts payable due to:

– third parties 2,832,992 232,729

– group companies – 23,827

Other current liabilities due to:

– third parties 2,099,683 111,674

– group companies – 1,040,917

Advance customer payments – 4,988,432

Accrued expenses 12,672,163 5,023,610

Deferred revenue (short-term) 711,046 525,392

Total current liabilities 23,240,724 13,193,231

Non-current liabilities

Interest-bearing loans and borrowings due to: 4

– third parties 1,322,110 42,443

– group companies 702,656 6,806,000

Other non-current liabilities due to:

– shareholders 321,079 –

– group companies 825,649 599,654

Deferred revenue (long-term) – 80,376

Provisions 9,400,000 –

Total non-current liabilities 12,571,494 7,528,473

Total liabilities 35,812,218 20,721,704

Shareholders’ equity

Share capital 5 2,130,858 4,419,213

Legal reserves (share premium) 1,065,429 2,209,607

Other reserves (share premium) 57,061,087 48,448,000

Reserve for own shares 2 2

Accumulated losses

– Accumulated losses brought forward – –

– Net loss for the year -7,518,210 -38,828,387

Total shareholders’ equity 52,739,166 16,248,435

Total liabilities and equity 88,551,384 36,970,139

p.96 Statutory financial statements

Income Statement


(in CHF) 2008 2009

Licence revenue 17,449,394 12,134,703

Service revenue 7,627,844 5,740,956

Revenue with group companies 2,657,358 3,284,993

Total revenue 27,734,596 21,160,652

Cost of licence revenue -4,016,727 -4,341,198

Cost of service revenue -11,154,080 -7,542,449

Total cost of revenue -15,170,807 -11,883,647

Gross profit 12,563,789 9,277,005

Research and development -1,973,488 -3,802,415

Sales and marketing -5,605,206 -2,275,642

Release of bad debt provision 246,720 64,060

General and administrative -7,218,111 -10,264,910

Amortisation of intangible assets -7,249,260 -12,279,395

Other income 272,582 160,817

Loss from operations before extraordinary items, interest and taxes -8,962,974 -19,120,480

Financial income 2,730,634 1,195,310

Financial expenses -2,196,453 -946,174

Profit on sale of assets – 20,237,095

Value adjustment on investments – -2,402,671

Decrease/(increase) of value adjustment on loans 111,262 -28,256,400

Ordinary operating loss -8,317,531 -29,293,320

Release of provisions 2,000,000 9,400,000

Extraordinary loss from change in accounting policy – -17,609,932

Loss before taxes -6,317,531 -37,503,252

Income and withholding taxes -1,200,679 -1,325,135

Net loss -7,518,210 -38,828,387

Notes to the statutory financial statements p.97

Notes to the statutory financial statements

1 General

At an extraordinary meeting of shareholders on March 18, 2009 it was decided to change the

name of the Company from formerly Esmertec AG to Myriad Group AG. The shares of the

Company are quoted on the SIX Swiss Exchange.

The prior year figures have been restated to align them with the presentation of the current year.

2 Change in accounting policies and estimates

The accompanying financial statements are presented on the basis that the Group will continue as

a going concern using the historical cost convention.

The current reporting period was influenced by the following changes in accounting policies and

accounting estimates:

Revenue recognition

In 2009 Myriad Group AG decided to change its accounting policy for recognising revenue

for committed volume contracts. While previously, revenues arising from committed volume

contracts were recognised up-front upon delivery of the master copy, and accounts receivable

were subsequently reviewed for any impairment, the revised policy leads to the recognition of

revenues when payments actually become due, based on quarterly royalty reports or any other

specific payment terms. Past experience has shown that the collectability of receivables related

to contracts with extended payment terms (due in more than 12 months) is not always given and

significant bad debt expenses on accounts receivable from such contracts were incurred. As a

result, Management of the Company has come to the conclusion that extended payment terms

beyond one year should be interpreted as an indicator that collectability is not deemed probable,

which is also in line with relevant US guidance related to the software industry. As a result credit

notes were issued for previously issued invoices from committed volume contracts.

The changed Group accounting policy had the following impact on the financial statements:

previously recognised accounts receivable (including withholding tax receivables) totalling

CHF 25.1 million were released to extraordinary expenses. This loss was partly compensated

by the release of accrued expenses (accrued licence costs in connection with the committed

volume contracts receivables as well as withholding taxes accrued) totalling CHF 7.5 million.

The net effect of the change in revenue recognition policy therefore amounted to CHF 17.6 million

which is shown as extraordinary expenses in the profit and loss account.

Change in accounting estimate of useful life of intangible assets

In light of the increasing pace of technological change, Management reduced the estimated life

of capitalised development costs from 5 to 3 years from January 1, 2009 onwards. The 2009

impact from this change of accounting estimate totals CHF 2.9 million which is included in

amortisation of intangible assets.

Change in disclosure of foreign exchange results

In 2009 Myriad Group decided to change its disclosure of foreign exchange results. Whilst

previously foreign exchange gains were disclosed in financial income and foreign exchange losses

were disclosed in the financial expense lines of the statutory financial statements, the Company

now discloses the net foreign exchange result in the corresponding financial income or expense

line. The prior year figures were restated accordingly.

p.98 Notes to the statutory financial statements

3 Significant investments

As at December 31, 2009, Myriad Group AG held investments in the following companies:

Company, domicile Purpose Percentage held Share capital

2008 2009

Myriad France SAS, Le Bourget du Lac, France (Formerly Purple Labs SA) E/S 0 100 EUR 564,691

Myriad Technology AG, Dübendorf, Switzerland (Formerly Esmertec Holding AG) A 100 100 CHF 1,000,000

Esmertec Inc., Newark, DE, USA S 100 100 USD 100,000

Myriad (China) Co. Ltd., Beijing, PRC E/S 65 100 CNY 2,000,000

OOVM A/S, Aarhus, Denmark In liquidation 100 100 DKK 500,000

Myriad Group Korea Co. Ltd., Seoul, Korea E/S 100 100 KRW 50,780,000

Myriad Group Australia Pty. Ltd., North Sydney, Australia E/S 0 100 AUD 100

Myriad Japan Inc., Tokyo, Japan E/S 0 100 JPY 5,000,000

Certoise 2G SAS, Cergy, France E/S 100 01 EUR 553,790

A = Administrative

S = Sales and Support

E = Engineering services (internal/external)

1 = Merged with Myriad France SAS with effect from January 1, 2009

In April 2009 Myriad Group AG acquired Purple Labs SA, Le Bourget du Lac, France (subsequently renamed to Myriad France SAS) and its subsidiary companies in exchange for shares issued by the Company (see Note 5 for further details).

As part of an internal reorganisation that simplifies Myriad Group’s administrative management, Certoise 2G SAS and Esmertec France SA were transferred to Myriad France SAS and subsequently merged. Esmertec France SA was held by the fully owned subsidiary Myriad Technology AG and financed by a loan provided by the Company to Myriad Technology AG.

On the sale of its investment Myriad Technology AG suffered a loss and subsequently the loan provided as well as the investment in Myriad Technology AG had to be provided for by the Company (included in value adjustments on loans and value adjustment on investments respectively). On the sale of Certoise 2G SAS the Company realised a profit (included in profit

on sale of assets).


4 Interest-bearing loans and borrowings

At December 31,

(in CHF) 2008 2009

Due to third parties 5,871,950 1,289,093

– thereof convertible bond 2,560,062 1,239,918

– thereof credit line 2,760,971 –

– thereof loans 550,917 49,175

Due to group companies 702,656 6,806,000

Due to shareholder 375,000 –

6,949,606 8,095,093

In 2004 and 2005 Myriad issued convertible notes in the aggregate amount of CHF 33.850 million and CHF 3.175 million respectively. The convertible notes matured in September 2008 and 2009 respectively, and pay interest at a rate of 4.25% per annum on the face value of the notes. The holders have, since March 30, 2006, been entitled to convert the notes into shares at a fixed price. To the extent the bonds are not converted by the maturity date, Myriad Group AG is required to redeem the bonds at the principal amount plus a premium of 18.5%.

Amendment to convertible bondIn March 2007 amendments to the existing debt agreements were proposed. Convertible note holders representing 90.57% of the total convertible bond principal agreed to the amendments.The following terms and conditions were amended:

Conversion price and maturity datesFor one third of the bond principal, the conversion price was reduced from CHF 16.20 to CHF 13.00 and in exchange the maturity date on this third was extended one year beyond the original maturity date. For the second third of the bond principal, the conversion price was reduced from CHF 16.20 to CHF 11.00 and the maturity date was extended by two years. The conversion price and the maturity date have remained unchanged for the final third of the bond principal.

Non conversion premiumFor the third of the bond principal which has had its maturity date extended by one year beyond the original maturity date, the non-conversion premium has increased from 18.5% to 23.5%. For the third where the maturity was extended by two years, the premium has increased from 18.5% to 28.5%.

Myriad has the option to repay either a portion of, or the total of the unconverted balance of the notes on the original maturity dates, with the approval of the bond holders, and with the payment of the non conversion premium.

In 2009 the Company repaid CHF 1,320,144 of the convertible bond. The total remaining value of the convertible bond recognised in the balance sheet as at December 31, 2009 is CHF 1,239,918 (December 31, 2008: CHF 2,560,062). This amount will be due on September 30, 2010.

5 Share capitalAs recorded in the register of commerce on December 31, 2009, the share capital consisted of 44,177,506 fully paid shares with a nominal value of CHF 0.10 each. Taking into consideration the shares issued but not yet registered in connection with the exercise of stock options the share capital totals 44,192,137 fully paid shares with a nominal value of CHF 0.10 each.

The following summarises the movements in share capital in 2009:

Shares issued in connection with business combinationsOn December 31, 2008 the Board of Directors increased the share capital by 3,210,790 shares with a nominal value of CHF 0.10 each in connection with the acquisition of Certoise 2G SAS, France. The increase in share capital of nominal CHF 321,079 was not included in the share capital as per December 31, 2008 but was shown as other non-current liabilities due to shareholders, as the formal registration of the capital increase into the commercial registry of the canton of Zurich took place on January 7, 2009.


On February 13, 2009, Myriad Group AG and Purple Labs SA, Le Bourget du Lac, France, a

company developing and marketing mobile device software including mobile browsers and

messaging, announced that they had reached agreement on the acquisition by the Company

of all outstanding shares in Purple Labs SA, in an all-share transaction. The parties agreed in a

contribution agreement that the shareholders of Purple Labs SA receive 19,658,132 shares with

a nominal value of CHF 0.10 each in the Company as a consideration for 1,666,486 shares with a

nominal value of EUR 0.37 each in Purple Labs SA. The shares were created in an ordinary share

capital increase by resolution of the Board of Directors on April 17, 2009.

Shares issued through exercise of stock options

During 2009, 14,631 stock options were exercised resulting in net proceeds to the Company

of CHF 50,763. The nominal value of the shares issued through stock option exercises was

CHF 1,463.10 in 2009. The capital increase is recorded in the register of commerce in the year

following issuance, but has been recorded in the accounts in the year in which the stock options

were exercised.

Authorised and conditional share capital

The authorised share capital comprises shares which the Board of Directors is entitled to issue

at its discretion until June 30, 2010. The conditional share capital comprises shares which are

reserved for the exercise of stock options and for the conversion of convertible bonds.


According to a Board resolution at December 31, 2008, a total of 3,210,790 shares (CHF 321,079)

were issued out of the authorised share capital in connection with the acquisition of Certoise 2G

SAS, France.


voted to increase the authorised share capital by CHF 383,861.10 to a total amount of




voted to increase the conditional share capital by CHF 175,301.70 and at the ordinary general

meeting of shareholders held on May 19, 2009, by a further CHF 50,000 to a total amount of


The conditional share capital decreased in 2009 by 14,631 shares (CHF 1,463.10) due to the

exercise of stock options.

The following table summarises the share capital:

At December 31,

(in CHF) 2008 2009

Reconciliation of share capital

– Share capital as per registry of commerce 2,082,920 4,417,750

– Paid in capital not yet registered (executed stock options and conversion rights) 47,938 1,463

Total share capital 2,130,858 4,419,213

Unissued authorised and conditional share capital

– Unissued authorised share capital 374,592 437,374

– Unissued conditional share capital 223,721 447,559

Total unissued authorised and conditional share capital 598,313 884,933

Treasury sharesIn 2009 no transactions with treasury shares took place. At December 31, 2009 the balance

contains 20 shares with a nominal value of CHF 0.10 each.


Significant shareholders

At December 31, 2008 and 2009, the significant shareholders of the Company were the

following (>5%):

Percentage of shares held as of December 31,

Name of shareholder 2008 2009

Sofinnova Partners SA, Paris, France 14.9 27.7

Partners Group Holding AG, Baar, Switzerland 11.2 14.7

Earlybird Verwaltungs GmbH, Munich, Germany 7.6 11.5

Mitsui+ Co. Ltd., Tokyo, Japan 5.0 0.0

Sagem Telecommunications SA, Paris, France 0.0 6.5

6 Other disclosures related to the balance sheet and commitments

At December 31,

(in CHF) 2008 2009

Fire insurance value of furniture and equipment

Fire insurance value of fixed assets (Switzerland) 570,000 570,000

Insurance value for material damage of machinery, plant and equipment at replacement cost (UK) 1,200,000 1,200,000

1,770,000 1,770,000

Pension fund liabilities

Amounts due to pension funds 733,340 –

Unrecognised lease obligations

IT equipment 111,116 148,500

7 Disclosures related to the income statement


(in CHF) 2008 2009

Personnel expenses 12,770,710 9,655,713

Depreciation and amortisation 7,456,756 12,443,830

Gains on disposal of non-current assets 1,921 20,237,095

Non-operating income 272,582 160,817

8 Guarantees, pledges in favour of third parties

An amount of CHF 622,665 (USD 600,00) is pledged at Credit Suisse AG as per December 31,

2009 in order to cover two bid bonds.

The amount of CHF 30,000 is pledged at UBS AG as per December 31, 2009 in order to cover the

limits of the company credit cards of Myriad Group AG.


9 Compensation

Compensation paid to the members of the Board of Direcctors in 2009 and 2008:

(in CHF) Cash

compensation

Number of options granted

Fair value of stock options

granted1)

Total compensation

2009

Total compensation

2008

Dr. Rolf P. Jetzer Chairman of the Board, Member CNC 2) 66,667 90,000 180,000 246,667 –

Loek van den Boog

Board Member, Head of AC, Member CNC 3) 38,333 30,000 60,000 98,333 –

Roland Manger Board Member3) 25,000 30,000 60,000 85,000 –

Michel Paulin Board Member, Head of CNC, Member AC4) 25,000 30,000 60,000 85,000 –

Hans-Ulrich Müller

Vice Chairman, Member CNC35,833 10,000 20,000 55,833 67,120

Jean Schmitt Board Member 30,000 10,000 20,000 50,000 57,120

Michel Bon Board Member, Member AC 38,333 10,000 20,000 58,333 77,120

Hans Peter Baumgartner

Chairman of the Board, Member AC, Member CNC (resigned)5) 227,853 – – 227,853 338,136

Jean-Claude Martinez

Board Member, Member AC (resigned)5) 11,250 – – 11,250 45,870

Ruedi Noser Chairman of the Board (resigned)6) – – – – 13,487

Jean-Pascal Aubert

Board Member (resigned)6)

– – – – 13,487

Simon Wilkinson Board Member, CEO7) – – – – –

Total 498,269 210,000 420,000 918,269 612,340

1) The fair value of stock options granted is estimated at the date of grant using a binominal model, taking into account the terms and conditions upon which the options were granted. The options allocated are vesting on a straight-line basis over 4 years.

2) Dr. Rolf P. Jetzer was elected as a Board Member and Chairman of the Board on May 19, 2009.3) Loek van den Boog and Roland Manger joined the Board on March 18, 2009.4) Michel Paulin joined the Board on May 19, 2009.5) Hans Peter Baumgartner and Jean-Claude Martinez resigned as Board Members on May 19, 2009.6) Ruedi Noser and Jean-Pascal Aubert resigned from the Board in 2008.7) Simon Wilkinson joined the Board on March 18, 2009, his remuneration is disclosed under the Key Management note.

AC = Audit Committee

CNC = Compensation and Nomination Committee

Compensation paid to the members of the key management in 2009 and 2008:

Remuneration: (in CHF)

Annual salary

Termination payment Bonus

Expense allowance

Options (at fair value)

Total 2009

Total 2008

Key management 2,897,426 540,000 1,664,698 98,352 1,440,000 6,640,476 3,002,605

of whom

Simon Wilkinson, CE0 317,966 – 432,434 – – 750,400 –

Thomas Hornung, former CEO 252,209 320,000 201,602 50,352 – 824,163 958,130

(highest individual compensation)


Indirect benefits:

Social insurance Pension Source tax Total 2009 Total 2008

Key management 543,508 110,709 88,496 742,713 273,921

of whom

Simon Wilkinson, CEO 110,684 – – 110,684 –

Thomas Hornung, former CEO* 55,263 27,875 75,437 158,575 80,510

(highest individual compensation)

* Thomas Hornung resigned as at March 18, 2009.

Shareholdings of members of the Board of Directors, key management or persons related to them

Related persons or companies are family members and persons or companies over which

significant influence can be exercised. Transactions with related persons and companies must be

settled on prevailing market conditions.

Shareholdings of Board of Directors and key management

Number of shares as at

December 31, 2009

Number of options as at December 31,

2009

Dr. Rolf P. Jetzer Chairman of the Board, Member CNC – 90,000

Loek van den Boog Board Member, Head of AC, Member CNC 63,050 30,000

Roland Manger Board Member – 30,000

Michel Paulin Board Member, Head of CNC, Member AC – 30,000

Hans-Ulrich Müller Vice Chairman, Member CNC 42,415 26,000

Jean Schmitt Board Member 1 26,000

Michel Bon Board Member, Member AC 1 50,000

Simon Wilkinson Board Member, CEO 1,073,255 –

Steve Langkamp CCO 321,974 107,320

James Bodha CFO – 250,000

Gordon Tsang SVP Sales of Device Solutions & GM Asia – 188,699

Benoit Schillings CTO – 250,000

Malcolm Dawe CPO – 220,000

In June 2007, Myriad signed a consulting agreement with a member of Myriad’s Board of Directors

to provide certain consulting services to Myriad, in the area of business and marketing consulting

in mobile, multimedia and mobile operator markets. This consulting agreement was renewed in

2009 and expenses recognised during the year ended December 31, 2009 totalled

CHF 34,500 (2008 CHF 261,076).

In September 2008 Myriad Group AG signed a short term consulting agreement with a member

of Myriad’s Board of Directors to provide certain services to Myriad in the area of acquisition. For

2009, expenses recognised from this contract totalled CHF 20,216 (2008 CHF 145,762).

All transactions with related parties Myriad is entering into are negotiated on arms’ length

basis. Apart from the compensation paid to the Board of Directors and key management and the

regular contributions to the various pension fund institutions and the related party transaction as

disclosed above, no further transactions with related persons or companies took place.

10 Risk management Enterprise risk management as a fully integrated risk management process was applied

systematically in 2009. Myriad’s risk analysis is prepared by the Corporate Management and

gives an overview of the main risks of the company, their significance, measures, time planning

and responsibilities.

Measures in order to reduce risk exposures were defined and are in line with Myriad’s strategic

targets. Risk analysis, measures and process of execution are discussed twice a year (at half year

Board Meetings).

p.104 Proposal by the Board of Directors

Proposal by the Board of Directors to set off accumulated losses against share premium

(in CHF)

At December 31,

2008* 2009

Accumulated losses brought forward 0 0

Net loss for the year -7,518,210 -38,828,387

Accumulated losses -7,518,210 -38,828,387

The Board of Directors proposes to the General Meeting of Shareholders

- to set off against share premium the accumulated losses as of December 31, 2009 of -7,518,210 -38,828,387

-7,518,210 -38,828,387

* The 2008 figures are shown for comparative purposes only.

Report to the statutory financial statements 2009 p.105

Report to the Statutory Financial Statements 2009 Report of the Statutory Auditor on the Financial Statements to the General Meeting of Shareholders of

Myriad Group AG, Dübendorf

As statutory auditor, we have audited the accompanying financial statements of Myriad Group AG, which are presented on pages 94 to 103 and comprise the balance sheet, income statement and notes for the year ended

December 31, 2009.

Board of Directors’ ResponsibilityThe Board of Directors is responsible for the preparation of the financial statements in accordance with the requirements of Swiss law and the company’s articles of incorporation. This responsibility includes designing, implementing and maintaining an internal control system relevant to the preparation of financial statements that are free from material misstatement, whether due to fraud or error. The Board of Directors is further responsible for selecting and applying appropriate accounting policies and making accounting estimates that are reasonable in the circumstances.

Auditor’s ResponsibilityOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Swiss law and Swiss Auditing Standards. Those standards require that we plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers the internal control system relevant to the entity’s preparation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control system. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of accounting estimates made, as well as evaluating the overall presentation of the financial statements. We believe that the

audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements for the year ended December 31, 2009 comply with Swiss law and the

company’s articles of incorporation.

Report on Other Legal RequirementsWe confirm that we meet the legal requirements on licensing according to the Auditor Oversight Act (AOA) and independence (article 728 CO and article 11 AOA) and that there are no circumstances incompatible with our independence.

In accordance with article 728a paragraph 1 item 3 CO and Swiss Auditing Standard 890, we confirm that an internal control system exists, which has been designed for the preparation of financial statements according to the instructions of the Board of Directors.

We further confirm that the proposed appropriation of available earnings complies with Swiss law and the company’s articles of incorporation. We recommend that the financial statements submitted to you be approved.

KPMG AG

Markus Forrer Urs MatterLicensed Audit Expert Licensed Audit ExpertAuditor in Charge

Zurich, April 27, 2010

p.106

we anticipate needs and exceed expectations

p.107

Additional Information

p.108 Information for Investors

Information for investors

Share price data

Symbol: MYRN

Listing: SIX

Nominal value: CHF 0.10

ISIN: CH0019624805

Swiss Security Number (Valor): 1,962,480

2007 2008 2009

Number of shares, at year end 20,006,797 21,308,584 44,192,137

Year high CHF 11.45 CHF 11.80 CHF 6.40

Year low CHF 7.88 CHF 4.36 CHF 3.50

Year end CHF 11.00 CHF 6.40 CHF 4.85

Average daily trading volume (shares) 94,534 26,847 28,806

Earnings (loss) per share (IFRS) USD -1.42 USD -0.37 USD -1.47

Ordinary dividend per share – – –

Market capitalisation at year end CHF 220.1 million CHF 156.9 million1 CHF 214.3 million

Financial calendar

May 25, 2010: Annual General Meeting

For the announcement dates of our quarterly results please refer to our website

http://www.myriadgroup.com/Investors/Investor-Calendar.aspx

Contact information

James Bodha

Chief Financial Officer

Myriad Group AG

Lagerstrasse 14

8600 Dubendorf, Switzerland

Phone +41 44 823 89 00

Fax +41 44 823 89 99

Any queries please contact the Investor Relations team

[email protected]

Annual Report 2009

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Myriad and certain other trade names, trademarks and logos are trademarks or registered trademarks of Myriad Group AG. All other trademarks, logos or source marks are the property of their respective owners. All rights reserved. Copyright © Myriad Group AG 2010.

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About MyriadMyriad Group AG is a global leader in mobile technology and has shipped over 3.2 billion software applications in more than 2 billion

mobile phones. Its comprehensive portfolio includes browsers, messaging, Java, social networking, user interfaces and middleware for

all types of mobile phones, from ultra-low cost handsets to advanced smartphones.

The company provides both individual components and complete solutions, which enable handset manufacturers and operators to

deliver amazing experiences on mobile phones.

Myriad also develops USSD-based customer self-care platforms that deliver over 10 billion messages a year to 220 million mobile users

across more than 30 mobile operators worldwide.

Myriad was created from the combination of industry-leading companies, Esmertec and Purple Labs. It operates worldwide, with

offices in Switzerland, France, UK, USA, Mexico, China, South Korea, Taiwan, Japan and Australia. Headquartered in Dübendorf-Zürich

Switzerland, Myriad is listed on the SIX Swiss Exchange (SIX Symbol: MYRN). For more information, visit www.myriadgroup.com

Myriad Group AG

Lagerstrasse 14

8600 Dübendorf

SWITZERLAND

t: +41 (0) 44 823 89 00

f: +41 (0) 44 823 89 99

e: [email protected]

www.myriadgroup.com

Myriad Group AG

Myriad Group Annual Report 2009

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