6 Notes to Equity and Liabilities of the Balance Sheet

6.1 ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable were non-interest-bearing and under normal circumstances had payment terms of no more than 30 days.

Accounts payable are listed in the table below.

in 000’ € 12/31/2016 12/31/2015
Trade Accounts Payable 8,457 237
Licenses Payable 179 158
Accrued Expenses 22,838 20,275
Other Liabilities 749 1,672
Total 32,223 22,342

Accrued expenses mainly included accrued personnel expenses for payments to employees and management amounting to € 2.8 million (December 31, 2015: € 3.1 million), provisions for outstanding invoices in the amount of € 2.6 million (December 31, 2015: € 2.7 million), external laboratory services in the amount of € 16.2 million (December 31, 2015: € 13.9 million), license payments in the amount of € 0.1 million (December 31, 2015: € 0.1 million), audit fees and other audit-related costs in the amount of € 0.1 million (December 31, 2015: € 0.1 million) and expenses for legal advice in the amount of € 1.0 million (December 31, 2015: € 0.4 million).

At the Company’s Annual General Meeting in June 2016, the Super­visory Board was authorized to appoint PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft (PwC GmbH), Munich, as the auditor.

In the 2016 financial year, PwC GmbH received compensation from MorphoSys in the amount of € 251,582, which included audit fees of € 190,000, fees for other audit-related and valuation services of € 36,832 for the review of the half-year-report as well as fees for other services of € 24,750. PwC GmbH did not provide any tax advisory services in 2016.

6.2 TAX PROVISIONS AND OTHER PROVISIONS

As of December 31, 2016, the Group recorded tax provisions and other provisions of € 4.9 million (2015: € 3.2 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 well as for obligations resulting from an onerous contract with a contract manufacturing organization for drug substances and drug products for clinical trial use.

As of December 31, 2016, tax provisions and other provisions were uncertain in their amount and are expected to be utilized in 2017.

The table below shows the development of tax provisions and other pro­visions in the 2016 financial year.

in 000’ € 01/01/2016 Additions Utilized Released 12/31/2016
Tax Provisions 1,698 114 0 160 1,652
Provisions 1,480 2,967 740 489 3,218
Total 3,178 3,081 740 649 4,870

6.3 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’ € 2016 2015
Opening Balance 4,507 58,752
Prepayments Received in the Fiscal Year 17,441 18,133
Revenue Recognised through Release of Prepayments in line with Services Performed in the Fiscal Year (19,043) (72,378)
Closing Balance 2,905 4,507
thereof short-term 1,232 1,994
thereof long-term 1,673 2,513

6.4 OTHER LIABILITIES

Other liabilities exclusively consisted of the deferred amount of the rent-free period for the building located at Semmelweisstraße 7, Planegg, as agreed in the lease contract. This item is released over the contractually agreed minimum rent period.

The current portion amounting to € 0.1 million of this liability was includ­ed in the item accounts payable and accrued expenses.

6.5 STOCKHOLDERS’ EQUITY

6.5.1 COMMON STOCK

As of December 31, 2016, the Company’s common stock, including treasury stock, had increased by € 2,622,088 to € 29,159,770 from its level of € 26,537,682 as of December 31, 2015. Each no-par value share is entitled to one vote. The increase in common stock resulted entirely from the new shares created in the context of the capital increase in November 2016.

As of December 31, 2016, the Company held 396,010 shares of treasury stock amounting to € 14,648,212 which represents a decrease of € 1,179,734 compared to December 31, 2015 (434,670 shares, € 15,827,946). This decrease was the result of the transfer of 90,955 treasury stock to the Management Board and Senior Management under the 2012 long-term incen­tive plan (LTI plan) totaling € 3,361,697. The vesting period for this LTI program expired on April 1, 2016 and October 1, 2016 and provided beneficiaries a six-month option to receive a total of 90,955 shares. The decline in treasury stock was partly offset by MorphoSys’s repurchase of 52,295 of its own shares on the stock exchange. The repurchase totaling € 2,179,963 was carried out at a weighted-average share price of € 41.69. Brokerage fees for the repurchase totaled € 1,999. 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.

6.5.2 AUTHORIZED CAPITAL

On November 15, 2016, a total of 2,622,088 shares were issued from Authorized Capital 2014-I in the context of a cash capital increase, which fully exhausted the previous Authorized Capital 2014-I. The cash capital increase was recorded in the commercial register on November 17, 2016. Compared to December 31, 2015, the number of authorized ordinary shares declined by 2,622,088 from 13,206,421 to 10,584,333.

6.5.3 CONDITIONAL CAPITAL

Compared to December 31, 2015, the number of ordinary shares of con­ditional capital decreased from 7,086,000 to 6,752,698. The Annual General Meeting on June 2, 2016 cancelled the Conditional Capital 2003-II amounting to € 36,000 and the Conditional Capital 2011-I amounting to € 6,600,000. At the same time, the Annual General Meeting created the Conditional Capital 2016-I amounting to € 5,307,536 and Conditional Capital 2016-III amounting to € 995,162.

6.5.4 TREASURY STOCK

In the years 2016 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
Purchase in 2016 52,295 2,181,963
Transfer in 2016 (90,955) (3,361,697)
As of 12/31/2016 396,010 14,648,212

In 2016, the weighted average price of the repurchased shares was € 41.69 per share (2015: € 60.79 per share). Treasury shares are recognized at acqui­sition cost.

6.5.5 ADDITIONAL PAID-IN CAPITAL

As of December 31, 2016, additional paid-in capital amounted to € 428,361,175 (December 31, 2015: € 319,394,322). The total increase of € 108,966,853 resulted mainly from the capital increase in November 2016 (€ 109,971,132, net of costs for raising equity totaling € 2,778,652). In addition, additional paid-in capital increased by € 2,357,418 from personnel expenses resulting from share-based payments. The reclassification of treasury shares of € 3,361,697 in the context of the allocation of shares under the 2012 performance-based share plan had a compensating effect.

In 2015, additional paid-in capital increased by € 1,018,602 and resulted from the exercise of convertible bonds granted (€ 1,276,590) and per­sonnel expenses resulting from share-based payments (€ 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.

6.5.6 REVALUATION RESERVE

As of December 31, 2016, the revaluation reserve amounted to € 136,101 (December 31, 2015: € –202,158). The increase amounting to a total of € 338,259 arose from a change in the unrealized gains and losses on available-for-sale securities and bonds of € –21,154 and the change in unrealized gains of € 359,413 from cash flow hedges.

6.5.7 ACCUMULATED INCOME/DEFICIT

The consolidated net loss of € –60,382,776 was offset in accumulated deficit. The accumulated income from € 32,834,107 in 2015 inverted to an accumulated deficit of € –27,548,669 in 2016.

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