Financial Statements

Consolidated Balance sheet as at 31 december 2019

Consolidated profit and loss account for the year 2019

Consolidated cash flow statement for the year 2019

(in € 1,000s)	Notes	2019	2018
Cash flows from operations
Earnings before interest and tax		8,610	3,960
Adjustments for
Depreciation		3,261	3,500
Increase (decrease) in provisions		54	-279
Decrease of fiscal reserves		7	-
		3,322	3,221
Changes in working capital
Movements in receivables		30	-7,871
Increase (decrease) in payables		4,246	3,799
Other changes in working capital		-61	-
		4,215	-4,072
Cash flow from operating activities		16,147	3,116
Interest received		5	50
Interest paid		-41	-
Income tax paid		-1,526	-1,125
		-1,562	-1,075
Cash flows from operations		14,585	2,041
Cash flow from investing activities
Purchase of property, plant and equipment		-1,903	-1,140
Proceeds from sales of property, plant and equipment		48	-
Cash flow from investing activities		-1,855	-1,140
Cash flow from financing activities
Dividend paid		-15,000	-2,400
Other cash flows		-	-114
Cash flow from financing activities		-15,000	-2,514
Change in cash		-2,270	-1,613
Change in Cash
Cash and cash equivalents at the beginning		10,060	11,673
Increase (decrease) cash and cash equivalents		-2,270	-1,613
Cash and cash equivalents at the end		7,790	10,060

Notes to the corporate financial statements of the consolidated annual report

Entity information

Registered address and registration number trade register
The registered and actual address of Schuberg Philis Group BV is Boeing avenue 271, 1119PD in Schiphol-Rijk Nederland. Schuberg Philis Group BV is registered at the Chamber of Commerce under number 34181542.

General notes

The most important activities of the entity
The activities of Schuberg Philis Group B.V. consist mainly of providing IT services.

The location of the actual activities
The actual address of Schuberg Philis Group BV is Boeing avenue 271, 1119PD in Schiphol-Rijk. The revenue of Schuberg Philis Group BV is realized in The Netherlands.

Disclosure of going concern
The financial statements have been prepared on the basis of the going concern assumption.

Disclosure of group structure
Schuberg Philis Group BV is the head of the group. The following entities are included in the consolidated financial statements:

• Schuberg Philis BV, Schiphol-Rijk, The Netherlands
• Schuberg Philis Asset Management International BV, Schiphol-Rijk, The Netherlands
• Schuberg Philis Management BV, Schiphol-Rijk, The Netherlands
• Schuberg Philis US LLc, Glendale Colorado, United States

All entities are direct or indirect 100% owned by Schuberg Philis Group BV.

Application of Section 402, Book 2 of the Dutch Civil Code
The financial information of Schuberg Philis Group B.V. is included in the consolidated financial statements. For this reason, in accordance with Section 402, Book 2 of the Dutch Civil Code, the income statement of Schuberg Philis Group B.V. exclusively states the share in the result after taxation of companies in which participating interests are held and the general result after taxation.

Disclosure of estimates
In applying the principles and policies for drawing up the financial statements, the directors of Schuberg Philis Group BV make different estimates and judgments that may be essential to the amounts disclosed in the financial statements. If it is necessary in order to provide the transparency required under Book 2, article 362, paragraph 1, the nature of these estimates and judgments, including related assumptions, is disclosed in the notes to the relevant financial statement item.

Disclosure of consolidation
The consolidated financial statements comprise the financial data of Schuberg Philis Group B.V. and Schuberg Philis B.V.. In preparing the consolidated financial statements, intra-group debts, receivables and transactions are eliminated.

Specification of related party transactions of importance and not taken under market conditions
During the year transactions with Stichting Administratiekantoor Schuberg Philis Group B.V.(STAK) took place. As part of the Employment Ownership Plan (EOP) the company supports the STAK in its operation. The company carriers costs for the STAK and related cost for tax matters, if any.

General accounting principles

The accounting standards used to prepare the financial statements The con­so­li­da­ted financial statement is drawn up in accordance with the provisions of Title 9, Book 2 of the DutchCivil Code.

Assets and liabilities are generally valued at historical cost, production cost or at fair value at the time of acquisition. If no specific valuation principle has been stated, valuation is at historical cost.

An asset is recognized in the balance sheet when it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity and the cost of the asset can be reliably measured. A liability is included in the balance sheet when it is expected to result in an outflow of resources embodying economic benefits and the amount of the obligation can be measured with sufficient reliability.

If a transaction results in a transfer of future economic benefits and when all risks relating to an asset or liability are transferred to a third party, the asset or liability is no longer recognized in the balance sheet. In addition, assets and liabilities are not recognized in the balance sheet as, from the moment the conditions with respect to the probability of economic benefits, expectations of outflow of resources embodying economic benefits and the ability to measure cost with sufficient reliability are not met anymore.

Conversion of amounts denominated in foreign currency
The financial statement is presented in euros, which is the functional and presentation currency of Schuberg Philis Group BV..

Foreign currency translation for the balance sheet
Monetary assets and liabilities in foreign currencies are converted to the closing rate of the functional currency on the balance sheet date. The translation differences resulting from settlement and conversion are credited or charged to the con­so­li­da­ted prof­it and loss ac­count.

Non-monetary assets valued at historical cost in a foreign currency are converted at the exchange rate on the transaction date.

Foreign currency translation and the processing of foreign currency translation differences in foreign currency transactions
Transactions in foreign currencies are stated in the financial statements at the exchange rate of the functional currency on the transaction date.

Operating leases
The company has lease contracts whereby a large part of the risks and rewards associated with ownership are not for the benefit of or incurred by the company. These lease contracts are recognised as operational leasing. Lease payments are recorded on a straight-line basis, taking into account reimbursements received from the lessor, in the con­so­li­da­ted prof­it and loss ac­count for the duration of the contract.

Financial instruments
Securities included in financial and current assets are stated at fair value, if these are related to securities held for trading or if they relate to equity instruments not held for trading, as well as derivatives of which the underlying object is listed on a stock exchange. All other on-balance financial instruments are carried at (amortised) cost. Within Schuberg Philis Group B.V. and its subsidiaries financial instruments include receivables, cash and cash equivalents, and long-term liabilities and short-term liabilities. Financial instruments are recognized initially at fair value, including direct attributable transaction costs. After initial recognition, financial instruments are stated against amortized cost. If there are no premiums or discounts and directly attributable transaction costs, the amortized cost is equal to the nominal value. On receivables, a provision deemed necessary is taken for risk of bad debt.

Credit risk
For details about the credit risks on accounts receivable from participating interests and the other receivables, reference is made to the principles of valuation of receivables.

Cash flow risk
Cash flow risk for the company is limited.

Interest rate risk
The company’s policy is not to use derivative financial instrument to control interest rate fluctuations. The foreign exchange risk is limited, as the company has limited volume of foreign currencies.

Fair value
The fair value of most of the financial instruments stated on the balance sheet, including accounts receivable, cash, and current liabilities, is close to the carrying amount.

Accounting principles

Property, plant and equipment
Tangible fixed assets are valued at acquisition costs or production costs plus additional costs less straight-line depreciation based on the expected life, unless stated otherwise. Impairments expected on the balance sheet date are taken into account.

Impairment of property, plant and equipment
On each balance sheet date, the corporation assesses whether there are any indications that a fixed asset may be subject to impairment. If there are such indications, the realisable value of the asset is determined. If it is not possible to determine the realisable value of the individual asset, the realisable value of the cash-generating unit to which the asset belongs is determined.

An impairment occurs when the carrying amount of an asset is higher than the realisable value; the realisable value is the higher of the realisable value and the value in use. An impairment loss is directly recognised in the con­so­li­da­ted prof­it and loss ac­count while the carrying amount of the asset concerned is concurrently reduced.

Land and buildings
Land and buildings are valued at historical cost plus additional costs or production cost less straight-line depreciation based on the expected useful life. Impairments expected on the balance sheet date are taken into account. With regard to the determination as to whether a tangible fixed asset is subject to an impairment, please refer to the relevant section.

For obligations to restore the asset after use (dismantling cost) a provision is recognised for the expected amount at the time of capitalisation. This amount is recognised as part of the carrying amount of the asset against which a provision is recognised for the full amount. A provision for major maintenance has been created for the future costs of major maintenance to the buildings. The addition to the provision is determined based on the expected amount of the maintenance work and the intervals between the times when major maintenance work is carried out.

Buildings and constructions are depreciated in 5-20 years.

Machinery
Plant and equipment are valued at historical cost plus additional costs or production cost less straight-line depreciation based on the expected useful life and impairments expected.

Subsidies on investments will be deducted from the historical cost price or production cost of the assets to which the subsidies relate.

Depreciation period of machinery:
Emergency power suppplies: 20 years
Security and communication equipment: 10 years
Computer equipment: 3-5 years

Other tangible assets
Other tangible assets are valued at historical cost plus additional costs of production costs less straight-line depreciation based on the expected useful life and impairments expected.

Other fixed assets are depreciated in 3-10 years.

Receivables
Receivables are initially valued at the fair value of the consideration to be received. Receivables are subsequently valued at the amortised cost price. If there is no premium or discount and there are no transaction costs, the amortised cost price equals the nominal value of the accounts receivable. If payment of the receivable is postponed under an extended payment deadline, fair value is measured on the basis of the discounted value of the expected revenues. Provisions for bad debts are deducted from the carrying amount of the receivable.

Tax receivables
Tax receivables are valued at their nominal value.

Provisions
Provisions are measured at the best estimate of the amount that is necessary to settle the obligation as per the balance sheet date. The provisions are carried at the nominal value of the expenditure that is expected to be necessary in order to settle the obligation, unless stated otherwise.

If obligations are expected to be reimbursed by a third party, such reimbursement is included as an asset in the balance sheet if it is probable that such reimbursement will be received when the obligation is settled.

Provision for repair costs
A provision for maintenance is recognized for expected maintenance costs of buildings and equipment based on a long-term maintenance program.

Other provisions
Other kinds of provision are included in accordance with the nominal value of the expenditure which is expected to be necessary to settle the obligations. Accounting principles for determining the result. The result represents the difference between the value of the services rendered and the costs and other charges for the year. The results on transactions are recognized in the year they are realized; losses are taken as soon as they are foreseeable. Costs are recognized at the historical cost convention and are allocated to the reporting year to which they relate.

Revenue recognition
The company takes the revenue from sales to the net revenue if there is convincing evidence of a sales agreement, when delivery has taken place, the prices have been agreed or can be determined, and there is reasonable certainty that the selling price is collectable. Revenue from projects is recognized over the duration of the project. Normally, these criteria are satisfied at the moment the product or the service is delivered and acceptance has been obtained, if required.

Net revenue
Net revenue represents amounts invoiced for goods and services supplied during the financial year reported on, net of discounts and value added taxes.

Revenues ensuing from the sale of goods are accounted for when all major entitlements to economic benefits as well as all major risks have transferred to the buyer. The cost price of these goods is allocated to the same period.

Revenues from services are recognized in proportion to the services rendered. The cost price of these services is allocated to the same period.

Applied policy of pension costs
Schuberg Philis Group BV applies a defined contribution pension plan. The payables during the reporting year is recorded as an expense. The contributions are recorded as personnel costs from the date that they become payable. Prepaid contributions are reported as accruals. Contributions that are not yet paid are included as a liability in the balance sheet. The pensionplan of the company is excecuted by Be Frank PPI NV, Amsterdam.

Depreciation of property, plant and equipment
Tangible fixed assets are depreciated from the date of initial use over the expected future economic life of the asset, while taking into account any applicable restrictions with respect to buildings, investment property, other tangible fixed assets. Land is not depreciated.

Future depreciation is adjusted if there is a change in estimated future useful life.

Gains and losses from the occasional sale of property, plant or equipment are included in depreciation.

Income tax expense
Tax on the result is calculated based on the result before tax in the consolidated profit and loss account, taking account of the losses available for set-off from previous financial years (to the extent that they have not already been included in the deferred tax assets) and exempt profit components and after the addition of non-deductible costs. Due account is also taken of changes which occur in the deferred tax assets and deferred tax liabilities in respect of changes in the applicable tax rate.

In the financial statements of group companies a tax charge is calculated on the basis of the accounting result. The corporate income tax that is due by these group companies is charged into the current accounts with Schuberg Philis.

Cash flow statement
The cash flow statement has been prepared using the indirect method. The cash items disclosed in the cash flow statement comprise cash at banks and in hand except for deposits with a maturity longer than three months. Cash flows denominated in foreign currencies have been translated at average estimated exchange rates. Exchange differences affecting cash items are shown separately in the cash flow statement. Interest paid and received, dividends received and income taxes are included in cash from operating activities. Dividends paid are recognised as cash used in financing activities. The purchase consideration paid for the acquired group corporation has been recognised as cash used in investing activities where it was settled in cash. Any cash at banks and in hand in the acquired group corporation have been deducted from the purchase consideration. Transactions not resulting in inflow or outflow of cash, including finance leases, are not recognised in the cash flow statement. Payments of finance lease instalments qualify as repayments of borrowings under cash used in financing activities and as interest paid under cash generated from operating activities.

Notes to the consolidated balance sheet as at 31 december 2019

Fixed assets

Tangible fixed assets

Current assets

Receivables and prepayments

Disclosure of receivables
Trade receivables and receivables from associated companies are due within one year. The other receivables are due within one year, excluding the deferred tax assets.

Disclosure of trade receivables
In 2019 Schuberg Philis Group BV has entered into a credit facility with ABN AMRO.

As part of this agreement the accounts receivable of the Group have, in case of default, been pledged.

Cash
As per yearend the company meets the covenant requirements.
As per 31 December 2019 the credit facility is not withdrawn.

Deposits
In the Cash and cash equivalents deposits are included for €275k. The other liquid assets are available on demand.

Provisions

Other provisions

Short-term liabilites

Taxes and social security contributions

Other liabilities and accrued expenses

Contingent assets and liabilities

Disclosure of off-balance sheet commitments

Schuberg Philis has long-term hardware leases, building leases and other lease  contracts totaling EUR 14,723 (2018: 11,947)

Operating lease

Operating lease commitments for lessors

Subsequent events
During the months February and March 2020 it became apparent that the Corona-virus has and will have significant impact on society at large. It is clear at this stage that all measures taken to limit the virus from further spreading, have an impact on Schuberg Philis, its people and its clients. At this stage it is not possible to reliably estimate the financial consequences of the Corona-virus for Schuberg Philis. However, we are confident that Schuberg Philis is well-positioned to overcome this crisis together with our clients.

Notes to the consolidated profit and loss account for the year 2019

Personnel costs

Remuneration of directors
Based on the exemption in Article 383 Section 1 of Part 9, Book 2 of the Dutch Civil Code, the Directors’ remuneration is not disclosed.

Average number of employees

Specification audit fees

Corporation tax

Disclosure of income tax expense
In 2018 Schuberg Philis successfully applied with the tax authorities for the applicability of the fiscal facility Innovatiebox for the period 2017-2019.

Disclosure of deductions subject to income tax expense elsewhere
The effect due to different tax rates in foreign jurisdictions in 2020 is -0.09% (2019:0%).

Disclosure of fiscal unity for income tax
The company forms a tax unity for corporation income tax purposes within the group. Each of the companies recognizes the portion of corporation income tax that the relevant company would owe as an independent taxpayer, taking into account the tax facilities applicable to the company.

Schuberg Philis Group BV, as head of the group, acts as counterpart for the tax authorities. Taxes owed by other group companies are presented as intercompany positions to the head of the group, Schuberg Philis Group BV.

As head of the group, Schuberg Philis Group BV accounts for deferred taxes position.

Other notes to the income statement
Indefeasible Right of Use

Schuberg Philis has been granted an Indefeasible Right of Use (IRU) to 20 selected fiber pairs owned by euNetworks B.V. for a period of 20 years, starting January 14, 2003. At a current market price, the IRUs received arevalued at k€ 720 (net value of IRUs granted to Schuberg Philis B.V. is k€ 720).

Related parties
Transaction with related parties occur when a relationship exists between the company, its participating interests and their directors and key management personnel. There were no transactions with related parties that were not at arm’s length.

Corporate balance sheet as at 31 december 2019

Corporate profit and loss statement for the year 2019

Notes to the corporate balance sheet as at 31 December 2019

Fixed assets

Financial assets

Financial assets

Register of participations

Participations in group companies

Schuberg Philis BV

Schuberg Philis Asset Management international BV

Current assets

Receivables and prepayments

Other receivables

Equity
The authorized capital of Schuberg Philis Group B.V. amounts to € 90,000, divided into 7,200,000 ordinary shares of € 0.01 each and 180,000 preferred shares of € 0.10 each. The schedule below explains the movements in equity for the year. 1,940,000 ordinary shares are issued and paid up. There are no preferred shares issued.

Movements in equity were as follows:

Short-term liabilites

Proposal appropriation of result
The management of the company proposes to appropriate the result as follows:

The appropriation of profit for the period 2019 in the amount of € 6,992,000 will be fully added to the other reserves.

This proposal needs to be determined by the General Meeting and has therefore not yet been processed in the annual accounts 2019 for the company.

Notes to the corporate profit and loss account for the year 2019

Average number of employees

During the financial year 2019 the average number of employees, converted into full time equivalents, amounted to 0 (2018: 0).

Share in result of participations

Schiphol-Rijk, April 2, 2020

On behalf of the Board and the Managing Directors,

Pim Berger

Other information

According to Article 28 of the Articles of Association, the profit shall be at the disposal of the General Meeting. The company may only make distributions of profit to the shareholders and other persons entitled to the dividends to reserves which must be maintained pursuant to law. Dividends shall only be distributed following adoption of the annual accounts which show that the distribution is permitted. The company may make interim dividends insofar as the preceding provisions have complied with. The General Meeting may decide to make interim dividends which consists wholly or partly of dividends in kind. The company shall not receive a dividend on shares for its own account. A demand for payment of a dividend will lapse after five years.

Reference to the auditor’s opinion

The independent auditors’report by Mazars Accountants N.V. has been included in the section below.

Independent auditor’s report

To: The shareholders of Schuberg Philis Group B.V.

Report on the audit of the financial statements 2019 included in the Annual Report

Our opinion
We have audited the financial statements 2019 of Schuberg Philis Group B.V., based in Amsterdam.

In our opinion the accompanying financial statements give a true and fair view of the financial position of Schuberg Philis Group B.V. as at 31 December 2019, and of its result for 2019 in accordance with Part 9 of Book 2 of the Dutch Civil Code.

The financial statements comprise:
1. the consolidated and company balance sheet as at 31 December 2019;
2. the consolidated and company profit and loss account for 2019; and
3. the notes comprising a summary of the accounting policies and other explanatory information.

Basis for our opinion
We conducted our audit in accordance with Dutch law, including the Dutch Standards on Auditing. Our responsibilities under those standards are further described in the ‘Our responsibilities for the audit of the financial statements’ section of our report.

We are independent of Schuberg Philis Group B.V. in accordance with the Wet toezicht accountantsorganisaties (Wta, Audit firms supervision act), the Verordening inzake de onafhankelijkheid van accountants bij assurance-opdrachten (ViO, Code of Ethics for Professional Accountants, a regulation with respect to independence) and other relevant independence regulations in the Netherlands. Furthermore we have complied with the Verordening gedrags- en beroepsregels accountants (VGBA, Dutch Code of Ethics).

We believe the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Report on the other information included in the Annual Report

• In addition to the financial statements and our auditor’s report thereon, the annual report contains other information that consists of:
• the directors’ report;
• other information as required by Part 9 of Book 2 of the Dutch Civil Code.

Based on the following procedures performed, we conclude that the other information:

• is consistent with the financial statements and does not contain material misstatements;
• contains the information as required by Part 9 of Book 2 of the Dutch Civil Code.

We have read the other information. Based on our knowledge and understanding obtained through our audit of the financial statements or otherwise, we have considered whether the other information contains material misstatements.

By performing these procedures, we comply with the requirements of Part 9 of Book 2 of the Dutch Civil Code and the Dutch Standard 720. The scope of the procedures performed is substantially less than the scope of those performed in our audit of the financial statements.

Management is responsible for the preparation of the directors’ report in accordance with Part 9 of Book 2 of the Dutch Civil Code and other information as required by Part 9 of Book 2 of the Dutch Civil Code.

Description of responsibilities regarding the financial statements

Responsibilities of management for the financial statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance with Part 9 of Book 2 of the Dutch Civil Code. Furthermore, management is responsible for such internal control as management determines is necessary to enable the preparation of the financial statements that are free from material misstatement, whether due to fraud or error.

As part of the preparation of the financial statements, management is responsible for assessing the company’s ability to continue as a going concern. Based on the financial reporting framework mentioned, management should prepare the financial statements using the going concern basis of accounting unless management either intends to liquidate the company or to cease operations, or has no realistic alternative but to do so.

Management should disclose events and circumstances that may cast significant doubt on the company’s ability to continue as a going concern in the financial statements.

Management is responsible for overseeing the company’s financial reporting process.

Our responsibilities for the audit of the financial statements
Our objective is to plan and perform the audit assignment in a manner that allows us to obtain sufficient and appropriate audit evidence for our opinion. Our audit has been performed with a high, but not absolute, level of assurance, which means we may not detect all material errors and fraud during our audit.

Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. The materiality affects the nature, timing and extent of our audit procedures and the evaluation of the effect of identified misstatements on our opinion.

We have exercised professional judgement and have maintained professional skepticism throughout the audit, in accordance with Dutch Standards on Auditing, ethical requirements and independence requirements. Our audit included e.g.:

• identifying and assessing the risks of material misstatement of the financial statements, whether due to fraud or error, designing and performing audit procedures responsive to those risks, and obtaining audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control;
• obtaining an understanding of internal control relevant to the audit 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 company’s internal control;
• evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management;
• concluding on the appropriateness of management’s use of the going concern basis of accounting, and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause a company to cease to continue as a going concern;
• evaluating the overall presentation, structure and content of the financial statements, including the disclosures; and
• evaluating whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

Because we are ultimately responsible for the opinion, we are also responsible for directing, supervising and performing the group audit. In this respect we have determined the nature and extent of the audit procedures to be carried out for group entities. Decisive were the size and/or the risk profile of the group entities or operations. On this basis, we selected group entities for which an audit or review had to be carried out on the complete set of financial information or specific items.

We communicate with management regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant findings in internal control that we identify during our audit.

Amsterdam, 2 April 2020

MAZARS ACCOUNTANTS N.V.

Drs V.J.M. Stappers RA