7 Notes to Equity and Liabilities of the Balance Sheet
7.1 ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable are non-interest-bearing and under normal circumstances have payment terms of no more than 30 days.
Accounts payable are listed in the table below.
|in 000’ €||12/31/2015||12/31/2014|
|Trade Accounts Payable||237||569|
Accrued expenses include accrued personnel expenses for payments to employees and management amounting to € 3.1 million (December 31, 2014: € 3.1 million), provisions for outstanding invoices in the amount of € 2.7 million (December 31, 2014: € 2.0 million), external laboratory services in the amount of € 13.9 million (December 31, 2014: € 10.5 million), license payments in the amount of € 0.1 million (December 31, 2014: € 0.4 million), audit fees and other audit-related costs in the amount of € 0.1 million (December 31, 2014: € 0.1 million) and expenses for legal advice in the amount of € 0.4 million (December 31, 2014: insignificant).
At the Company’s Annual General Meeting in May 2015, the Supervisory Board was authorized to appoint PricewaterhouseCoopers AG Wirtschaftsprüfungsgesellschaft (PwC AG), Munich, as the auditor.
In the 2015 financial year, PwC AG received compensation from MorphoSys in the amount of € 264,001, which included audit fees of € 188,495, fees for other audit-related and valuation services of € 36,506 (review of the halfyear- report) as well as fees for other services of € 39,000. PwC AG did not provide any tax advisory services in 2015.
7.2 TAX PROVISIONS AND OTHER PROVISIONS
As of December 31, 2015, the Group recorded tax provisions and other provisions of € 3.1 million (2014: € 0.8 million for the entire Group).
Tax provisions mainly consisted of income tax expenses and other provisions included provisions for onerous contracts and lease obligations for office premises, which will not be used anymore in the future.
As of December 31, 2015, tax provisions and other provisions were uncertain in their amount and are expected to be utilized in 2016.
The table below shows the development of tax provisions and other provisions in the 2015 financial year.
|in 000' €||01/01/2015||Additions||Utilized||Released||12/31/2015|
7.3 DEFERRED REVENUES
Deferred revenues are payments received from customers for which the services have not been rendered. The table below shows the development of this line item.
|in 000’ €||2015||2014|
Prepayments Received in the
Revenue Recognised through
Release of Prepayments in line with Services Performed in the
7.4 STOCKHOLDERS’ EQUITY
7.4.1 COMMON STOCK
As of December 31, 2015, the Company’s common stock, including treasury stock, had increased by € 80,848 to € 26,537,682 from its level of € 26,456,834 as of December 31, 2014. Each no-par value bearer share is entitled to one vote. Common stock increased by € 80,848 or 80,848 shares as a result of the exercise of 80,848 convertible bonds granted to the Management Board and the Senior Management Group. The weighted-average exercise price for each convertible bond exercised amounted to € 16.79.
As of December 31, 2015, the Company held 434,670 shares of treasury stock amounting to € 15,827,946 which represents an increase of € 1,575,984 compared to December 31, 2014 (450,890 shares, € 14,251,962). This increase was mainly the result of MorphoSys’s repurchase of 88,670 of its own shares on the stock exchange. The repurchase totaling € 5,389,984 was carried out at a weighted-average share price of € 60.79. Brokerage fees for the repurchase totaled € 2,947. Shares of treasury stock can be used for the purposes named in the authorizations of the Annual General Meetings on May 19, 2011 and May 23, 2014, and particularly for any existing or future employee participation schemes and/or to finance acquisitions. The shares may also be redeemed. The rise in treasury stock mentioned above was offset by the transfer of 104,890 own shares to the Management Board and Senior Management Group from the 2011 longterm incentive plan (LTI plan), totaling € 3,816,947. The four-year vesting period for this LTI program expired on June 1, 2015. As a result, the number of treasury shares as of December 31, 2015 amounted to 434,670.
7.4.2 AUTHORIZED CAPITAL
Compared to December 31, 2014, the number of authorized ordinary shares increased from 4,957,910 to 13,206,421. This resulted from the cancelation of Authorized Capital 2013-I totaling € 2,335,822 and the creation of new Authorized Capital 2015-I of € 10,584,333 at the Annual General Meeting on May 8, 2015. With the Supervisory Board’s consent, the Management Board is authorized under Authorized Capital 2015-I to increase the Company’s common stock on one or more occasions by up to € 10,584,333 by issuing up to 10,584,333 new, no-par value bearer shares until and including the date of April 30, 2020.
7.4.3 CONDITIONAL CAPITAL
Compared to December 31, 2014, the number of ordinary shares of conditional capital decreased from 7,166,848 to 7,086,000 as a result of the exercise of 80,848 conversion rights in 2015. Entry in the commercial register of the reduction in Conditional Capital through the exercise of 80,848 conversion rights was applied for in January 2016.
7.4.4 TREASURY STOCK
In the years 2014 and 2015, the Group repurchased own shares. The composition and development of this line item is listed in the following table.
|Number of Shares||Value|
|As of 12/31/2010||79,896||9,774|
|Purchase in 2011||84,019||1,747,067|
|As of 12/31/2011||163,915||1,756,841|
|Purchase in 2012||91,500||1,837,552|
|As of 12/31/2012||255,415||3,594,393|
|Purchase in 2013||84,475||2,823,625|
|As of 12/31/2013||339,890||6,418,018|
|Purchase in 2014||111,000||7,833,944|
|As of 12/31/2014||450,890||14,251,962|
|Purchase in 2015||88,670||5,392,931|
|Transfer in 2015||(104,890)||(3,816,947)|
|As of 12/31/2015||434,670||15,827,946|
The weighted average share price was € 60.79 per share (2014: € 70.53 per share) at the time of the repurchases in 2015. Treasury shares are recognized at acquisition cost.
7.4.5 ADDITIONAL PAID- IN CAPITAL
As of December 31, 2015, additional paid-in capital amounted to € 319,394,322 (December 31, 2014: € 318,375,720). The total increase of € 1,018,602 resulted from the exercise of convertible bonds granted, totaling € 1,276,590. Personnel expenses resulting from share-based payments increased additional paid-in capital by € 3,558,959. The reclassification of treasury shares of € 3,816,947 in the context of the allocation of shares under the 2011 performance-based share plan had a compensating effect.
In 2014, additional paid-in capital increased by € 7,412,069 and stemmed from the exercise of convertible bonds granted (€ 3,725,682) as well as from personnel expenses resulting from share-based payments (€ 3,686,387).
IFRSIFRS: International Financial Reporting Standards; future EU-wide standards produced by the IASB 2 “Share-based Payment” requires the consideration of the effects of share-based payments if the Group acquires goods or services in exchange for shares or stock options (“settlement in equity instruments”) or other assets that represent the value of a specific number of shares or stock options (“cash settlement”). The key impact of IFRS 2 on the Group is the expense resulting from the use of an option pricing model in relation to share-based incentives for employees and the Management Board. Additional information can be found under Items 7.1, 7.2 and 7.3 of the Notes.
7.4.6 REVALUATION RESERVE
As of December 31, 2015, the revaluation reserve amounted to € -202,158 (December 31, 2014: € -4,642). The reduction amounting to a total of € 197,516 arose from a change in the unrealized gain on available-for-sale securities and bonds of € 268,749, which was partly offset by the equity-related recognition of deferred taxes of € 71,233.
7.4.7 TRANSLATION RESERVE
The translation reserve decreased by € 293,846 from € 293,846 on December 31, 2014 to € 0 on December 31, 2015. This item included exchange rate differences from the revaluation of financial statements of Group entities prepared in foreign currencies as well as differences between the exchange rates used in the balance sheet and the income statement. As of December 31, 2015, the Group consisted exclusively of entities preparing their financial statements in euro.
7.4.8 ACCUMULATED INCOME
The consolidated net profit of € 14,900,768 is reported in accumulated income, causing a rise in accumulated income from € 17,933,339 in 2014 to € 32,834,107 in 2015.