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Myriad Group AG Annual Report 2010

Annual Report 2010 Myriad Group AG

Myriad Group AG Lagerstrasse 14,

Myriad Group AG is a global leader in mobile technology and has shipped over 3.8 billion software applications in more than 2.2 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.

8600 D端bendorf, SWITZERLAND

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 35 mobile operators worldwide.

t: +41 (0) 44 823 89 00 f: +41 (0) 44 823 89 99 e: info@myriadgroup.com www.myriadgroup.com

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

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 息 Myriad Group AG 2011. CD15505 02/11

Deep Expertise | Unrivalled Portfolio | Global Presence | Myriad

About Myriad

Deep Expertise | Unrivalled Portfolio | Global Presence |


Myriad Group AG Annual Report 2010

73

Information for investors Share price data Symbol: MYRN Listing: SIX Swiss Exchange Nominal value: CHF 0.10 ISIN: CH0019624805 Swiss Security Number (Valor): 1,962,480 Number of shares, at year end Year high

2010

2009

2008

48,560,611

44,192,137

21,308,584

CHF 5.35

CHF 6.40

CHF 11.80

Year low

CHF 2.95

CHF 3.50

CHF 4.36

Year end

CHF 5.00

CHF 4.85

CHF 6.40

Average daily trading volume (shares) Loss per share (IFRS)

92,804 USD (0.69)

Ordinary dividend per share Market capitalisation at year end

28,806 USD (1.47)

26,847 USD (0.37)

CHF 242.8 million

CHF 214.3 million

CHF 156.9 million

Financial calendar May 19, 2011: Annual General Meeting September 7, 2011: Half Year Results 2011 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 investor_relations@myriadgroup.com


Myriad Group AG Annual Report 2010

1

Global leader in mobile software and services Overview

Myriad is a global leader in mobile technology with software in over 2.2 billion mobile devices and operations covering four continents

“Powered by Myriad�

2 3

Business Review Business description

5

Corporate Governance Corporate governance report

7 26 29 34 63 64 67 72

Additional Information Information for investors Contact information

73 73

Financial Report 2010

Financial Report 2010 Management discussion and analysis of results Consolidated financial statements Notes to the consolidated financial statements Report to the consolidated financial statements Statutory financial statements Notes to the statutory financial statements Report to the statutory financial statements

Corporate Governance

Overview Financial highlights Letter to shareholders

Business Review

Contents


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Myriad Group AG Annual Report 2010

2010 Financial highlights Revenue USD 101.0m

EPS USD (0.69)

(19.7)% from USD 125.8m in FY091

USD (1.35) in FY09

Gross profit USD 67.3m

Operating cash flow USD (7.7)m

(22.1)% from USD 86.4m in FY09

USD 24.0m in FY09

EBITDA2 USD 11.3m

Cash & cash equivalents USD 33.7m

USD 25.0m in FY09

USD 33.2m at Dec 31, 2009

EBIT USD (27.6)m

Shareholders’ equity USD 62.0m

USD (48.1)m in FY09

USD 96.6m at Dec 31, 2009

EBIT without exceptional charges & income USD (13.1)m

Equity ratio: 48.1%

USD (3.3)m in FY09

56.2% at Dec 31, 2009

Total headcount at year end 5183

Net result USD (32.9)m

778 in FY09

USD (51.4)m in FY09

Sales breakdown per segment in 2010 (million USD)

Sales breakdown by type in 2010 (million USD)

10.3 35.4 90.7

Device Solutions Division Mobile Services Divison

65.5

Licence Service

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 for 2009 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. 3. 2010 year end headcount excludes 75 remaining heads whose cost was transferred to SAGEM Wireless from November 1, 2010 under the contract termination agreement.


Myriad Group AG Annual Report 2010

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Dear shareholders,

Building from our strong heritage in Mobile Software, we are establishing a growing presence in the Mobile Internet category from convergence of the client and platform aspects of our business. Validation of this strategy evolution is demonstrated in the 5-year partnership we secured with Telefónica to deliver mobile social network services to over 149 million consumers, across their 13 operations throughout Latin America.

2010 in review The Myriad team responded in a positive manner to these major challenges, focussing on further cost rationalisation as well as driving new lines of revenue. The business reduced its annualised cost-base by USD 23.0 million. This has been primarily driven by the transition of R&D resources to the Far East from Europe. Taking advantage of the engineering talent available in China, this office now accounts for over half of our development resource.

We commenced an accelerated innovation program to drive product advances in a number of growth areas in the second half of 2010: Analytics, Mobile Commerce and Web 3.0 – the Social Web. Subsequent demonstrations of our solutions with carriers, handset vendors and new media companies have proved positive, indicating strong commercial potential. Myriad retains a strong IP portfolio of patents and we are examining further commercialisation opportunities to monetise this asset base. An example of this was the sale in 2010 of IP valued at USD 19 million, whilst retaining the rights for our own use. We continue to attract leading talent. During the year, we strengthened the Senior Management team with four new Executives. Selective additions to the commercial, operations, marketing and human resources departments have made a positive impact to critical programs within the business. Changes in the Board of Directors and in our shareholder structure. Loek van den Boog was elected as the Chairman of Myriad in September 2010 to fill the post previously held by Rolf Jetzer. During the second half of 2010 and early 2011, our shareholder structure changed substantially. Large holdings held by three long-term Venture Capital investors were placed with institutional and private investors. Overall, ownership of almost half of our shares has moved to a new investor base, increasing the free float in our Company to over 80%. As a result of these transactions, the Board members representing the interests of the three Venture Capital investors decided to withdraw from the Board or to continue in their current term, but not stand for re-election. We would like to thank

Financial Report 2010

However, the second half of 2010 was a challenging period. First, the sad loss of Rolf Jetzer, our highly respected Chairman, who passed away unexpectedly of heart failure in September. Rolf made a significant contribution to our business during a major transformation period and we all miss his stewardship. Second, the premature termination of our long-term contract with SAGEM Wireless impacted revenues in 2010.

Our R&D investment strengthened our relationship with current customers such as Samsung, LG, Cisco and Orange, whilst also securing new commercial contracts with Telefónica and Softbank. We also introduced a carrier-grade cloud-computing platform into our operational footprint, allowing us to rapidly commercialise services on a global basis.

Corporate Governance

We continue to excel in our ability to bring smart phone experiences to lower-end devices with smaller memory and power thresholds – we have now shipped nearly 4 billion software clients. Myriad has maintained its position as the partner of choice to the world’s top mobile handset manufacturers and Tier 1 mobile operators in both developed and emerging markets – handling over 10 billion transactions each year from our Self-Care platforms which operators use to reduce customer support costs. Our software has also successfully transitioned into the home with, for example, Cisco, a leading supplier of set-top boxes.

By making early R&D investments in Android, we are now benefiting from the wide-scale adoption of this operating system by our major business partners during the year. In 2010, we also focused R&D on the challenge of allowing thousands of Android applications to run on handsets using other operating systems. As a result, the Alien Dalvik mobile client was developed and launched to widespread acclaim at Mobile World Congress 2011. Business Review

Myriad LifeServices are the everyday mobile experiences that people rely upon throughout the day: messaging, browsing and increasingly, accessing social networks. We believe our long-term role is to provide Mobile Internet solutions that break down barriers so people can effortlessly access the brands they know and like – Google, Facebook, YouTube and Twitter.

Myriad continued to make significant R&D investments in 2010. This amounted to USD 32.6 million gross or 32.3% of revenues and represents a material reduction on previous years as the business focuses around high-growth opportunities, whilst maintaining our ability to innovate.

Overview

In 2010, we further enhanced our leadership in mobile software and established new, high value lines of business around Mobile Internet LifeServices™.


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Myriad Group AG Annual Report 2010

Jean Schmitt, Roland Manger and Hans-Ulrich Müller for their strong commitment and contribution to the business.

America. We will focus business development activity to secure agreements that represent similar multi-country and major market deployments.

The management has a proven track record in the mobile industry. We have successfully acquired and integrated businesses into our operations to secure long-term commercial benefit. Evidence of this includes the Xumii acquisition in 2009 which led to the Telefónica partnership in 2010, and is now expected to generate USD 100 million over the next 5 years.

We are in a strong position to exploit our leading presence in USSD platforms to deliver an entry-level social messaging solution compatible with the 4 billion GSM handsets throughout the world. This brings the phenomena of mobile social networking to developing markets and will give many consumers their first experience of the internet.

We achieved our revised annual revenue guidance target of USD 100 million. This demonstrates the strong support of our long-term customers and incremental income from new accounts signed during the year.

Innovation and Synergies Myriad has a strong heritage of developing innovation and turning it into new lines of business. We have a rich pipeline that address pressing industry-wide issues.

We ended 2010 with an EBITDA profit of USD 11.3 million (before restructuring charges) and a net loss of USD 32.9 million.

Cost-management Continued operational simplification will be undertaken in 2011. Driving further economies through consolidation and streamlined decision-making, Myriad will continue on its drive to manage costs and achieve stronger margins.

We maintained a strong cash balance, ending the year with USD 33.7 million of cash. This level of liquidity provides us with a strong base from which to fund growth. The business currently has a number of unrelated law-suits underway. We believe our position is strong and are optimistic of a positive outcome, but settlement is unlikely during 2011. The year ahead In 2011, we will continue to cement our leadership in mobile software, meeting the global demand for smartphone experiences on lower-end devices. We will also focus on bringing innovation to market by developing new lines of revenue as the mobile and social worlds converge. Finally, we will maintain strong governance over costs. Mobile Device & Home Electronics Our expertise in this area is recognised by the continued selection of our technology by the world’s leading mobile OEM and ODM companies. We expect continued solid returns in 2011, with the potential for additional growth by leveraging our global scale and strong channel relationships to take advantage of consolidation opportunities in the mobile software sector. We have also seen our technology coming to the forefront of the Connected Home, making it easier to share digital content across surfaces: mobile, TV and PC. Our Connect & Share product is making significant headway in the Digital Living Network Alliance (“DLNA”) supported by the leading consumer electronics brands. Mobile Social Network Services We are at the forefront of the fastest growing sector in the Mobile Internet category. We will dedicate significant technical, operational and marketing resources to the successful rollout and mass-market adoption of our Mobile social networking services with Telefónica across Latin

Thanks The Company has a strong culture of teamwork and collective responsibility – one Myriad, winning together. On behalf of the Board of Directors and Senior Management team, we would like to take this opportunity to thank all our colleagues for their commitment and the contribution they have made to the business in 2010. We also thank our customers for continuing to select Myriad as their business partner. Finally, we thank you, our shareholders, for your continued confidence and support in Myriad Group AG. Sincerely,

Loek van den Boog Chairman

Simon Wilkinson CEO


Myriad Group AG Annual Report 2010

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Business description

Myriad Self-Care platforms are a core product line and will continue to contribute significant revenues in the years to come. Serving over 220 million consumers, these solutions handle billions of transactions each year, running information services and financial transactions that materially reduce operator customer support costs.

Our Business Model

Recognising our technical capability and broad level of skills, a majority of our customers also purchase Professional Services from Myriad to support the integration, customisation and ongoing maintenance of our solutions when they have been deployed. In addition to growing market share in our established product lines, we intend to build on our technical expertise and strong channel relationships to create additional lines of revenue.

The enablement of Myriad LifeServices has necessitated the introduction of cloud-computing platforms into our operational footprint, linking with device applications to deliver experiences that can be personalised for each user. Services operating from this platform are scalable on demand and connect through industry standard interfaces to other cloud businesses. Products can now be provisioned in a matter of weeks rather than months.

Mobile Holding the No. 1 position in both mobile Messaging and Browser software, these lines of business serve the major handset brands. We will invest in this portfolio to ensure service experiences keep pace as user preferences evolve. New product lines such as Connect and Share have gained market entry. This solution enables the seamless movement of content across screens: mobile, tablet and TV – underpinning the Connected Home initiative that major consumer electronics brands are bringing to market under the Digital Living Network Alliance. Myriad continues to focus R&D effort in Android. We see sustainable commercial opportunity in leveraging our technical expertise to make this popular operating system affordable within price-sensitive markets. In addition, Alien Dalvik has already demonstrated its potential to let smartphones and tablets on mobile operating systems access thousands of 3rd party apps in the Google Apps Market place.

Financial Report 2010

Both divisions have traditionally operated on fixed-price licences for a specific term, system capacity or a royalty for each unit shipped. In the past 12-months, we successfully introduced annuity Software-as-a-Service (“SaaS”) terms into our commercial framework, as evidenced by the Social Network Service agreements we have forged with operators. The business model is based on revenue sharing with the operator on tariffs that the mobile user is charged for gaining access to services powered by Myriad.

Myriad has established an unrivalled portfolio of technology that serves the mobile and consumer electronics markets throughout the world. We believe that convergence will play an increasingly important role in the Mobile Internet, harmonising Mobile-Social-Local experiences, powered from our LifeServices Platform.

Corporate Governance

We operate two divisions: Device Solutions and Mobile Services. Historically, our distribution channels for each division have been separate: Device Solutions primarily via the ODM/OEM route to market and Mobile Services directly to wireless carriers. However, we have had increasing success driving synergies in our product portfolio and cross-selling solutions.

Our Portfolio

Business Review

Our technology is proven as the revenue engines for mobile operators. Coupled with the expertise we provide to deliver smartphone experiences on lower-end handsets, Myriad is the partner of choice for the global ODM and OEM industry. Our browsing, messaging and run-time software continue to power hundreds of millions of new devices each year. Myriad technology is also securing a bigger presence in the consumer electronics sector, delivering core-operating software to power set-top boxes and Blu-ray players. Together, they will represent a core part of our business in 2011 and beyond.

To fuel this next phase of growth, we have converged our software applications with cloud-computing to create LifeServices™ – everyday experiences that help people to communicate and interact better. This platform facilitates our entry into the rapidly growing Mobile Internet category. Our range of Social Network Services, already deploying across Latin America with Telefónica and in Australia with Optus, are the first to be enabled from our LifeServices platform.

Overview

Myriad Group is a global leader in mobile technology. The Company provides the software and platforms that power hardware and services for the world’s foremost brands in Mobile, Consumer Electronics and increasingly, Digital Media.


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Myriad Group AG Annual Report 2010

LifeservicesTM for consumers and carriers, accessible anytime, anywhere. Social Following the huge rise in social networking across the world, its mass-market extension into mobile is expected to accelerate in 2011. We identified the long-term global opportunity around the convergence between mobile and social at an early stage. Myriad made a strategic acquisition during 2009, securing the Xumii service platform and linking it with our messaging client expertise to enable a rich social networking experience on any device. Our range of Social Network Services for the mobile market is comprehensive. Social Stream provides a rich mobilesocial experience on browsers and also embedded clients into major operating systems: Java, RIM, Apple and Android. For entry-level phones that are widespread across price-sensitive emerging markets, Updates provides a low-cost solution that can be quickly deployed by Carriers on our Self-Care platforms, which have been selected by Orange, Telefónica and other Tier 1 carriers throughout the world.

We have 5181 employees and believe that the software engineering skills within this team are one of the core assets in the business. In a fast moving technology-led sector, the ability to quickly build and integrate solutions translates into significant competitive advantage. Strengthened with the deep expertise we possess across different operating platforms, our global customer base can be confident in the delivery of high quality solutions. In order to maintain our competitive edge in the global marketplace, Myriad continues to selectively invest across the Group in high calibre personnel.

Local Industry commentators and leading brands increasingly cite that adding location to the mobile experience is the next layer of value creation for search and digital advertising. Following positive market feedback on our prototype which bridges the mobile and local domains, we intend to accelerate our Analytics proposition to field trials. Our local analytics device-based solution examines behaviour on the mobile handset, resolving the growing concerns around the use and storage of private data from Mobile Internet services without permission. It also presents a step-change in targeting that has the potential to substantially increase the inventory value in the Mobile Advertising ecosystem.

Our Operating Structure The Group is headquartered in Dübendorf-Zurich, Switzerland and is listed on the SIX Swiss Exchange. Our Company spans 14 locations across four continents to be in close proximity to our customers. Nevertheless, we operate as a global business, bringing engineering and product expertise together from around the world to ensure that optimum resources are deployed for each of our customers.

1. 2010 year end headcount excludes 75 remaining heads whose cost was transferred to SAGEM Wireless from November 1, 2010 under the contract termination agreement.


Myriad Group AG Annual Report 2010

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Corporate governance report

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, 2010.

Overview

Myriad 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.

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 page number(s).

Business Review

1. Group structure and shareholders Group structure The organisational structure of the Group as of December 31, 2010:

Board of Directors Chairman Loek van den Boog

Chief Executive Officer Simon Wilkinson

SVP & GM Device Solutions Division Gary Bunney

Chief Product Officer Malcolm Dawe

SVP & GM Mobile Services Division Michael Brady

Chief Financial Officer James Bodha

SVP Sales & GM Asia Gordon Tsang

SVP Marketing James Robins

Chief Technology Officer Benoit Schillings

VP Human Resources Liz Hitchen

Corporate Governance

Chief Commercial Officer Steve Langkamp

Listed companies

Non-listed companies For a table of the operational non-listed consolidated entities please refer to Note 29 of the consolidated financial statements of this Annual Report.

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

Financial Report 2010

Myriad 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 242.803 million as of December 31, 2010. The Company held 20 of its own shares as of December 31, 2010.


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Myriad Group AG Annual Report 2010

Significant shareholders Pursuant to the information provided to the Company by its shareholders in compliance with the Swiss Stock Exchange Act during financial year 2010, the following shareholders held more than 3% of the share capital as of December 31, 2010: Name of shareholder

Percentage held

Partners Group Holding AG, CH-Baar Patinex AG, CH-Wilen

1

5.26% 6.65%

2

Sagem Telecommunications SA, FR-Paris Cedex3

7.00%

Sofinnova Partners SA, FR-Paris

9.84%

UBS Fund Management, CH-Basel

5.56%

Simon Wilkinson, UK-Cheshire

3.73%

4

5

As a summary and based on the disclosure notices received by the Company, the following changes in significant shareholders occurred during the financial year 2010:

December 2010 Sofinnova Partners SA, FR-Paris disclosed in two separate disclosure notices that as a result of sale transactions, the holding as a group of shareholders consisting of FCPR Sofinnova Capital VI, V, IV and Sofinnova Partners SA had gone below the 15% threshold to 14.60% as of December 10, 2010 and below the 10% threshold to 9.84% as of December 14, 2010 (holding as of December 31, 2009 including shares from earn-out clause was 31.5%). UBS Fund Management, CH-Basel disclosed that in Collective Investment Schemes, and as a result of purchase transactions, its holding had gone above the 5% threshold to 5.56% as of December 13, 2010 (RoPAS (CH) Institutional Fund – Equities Switzerland holding a position of 4.12%). Partners Group Holding AG, CH-Baar (and group of shareholders managed by entities which are directly/indirectly controlled by Partners Group AG, Baar-Zug) disclosed that the composition of funds holding Myriad Group AG shares had changed. The reported position was 5.26% as of December 21, 2010.

November 2010 Sofinnova Partners SA, FR-Paris disclosed that as a result of sale transactions, the holding as a group of shareholders consisting of FCPR Sofinnova Capital VI, V, IV and Sofinnova Partners SA had gone below the 25% threshold to 24.54% as of November 25, 2010 (holding as of December 31, 2009 including shares from earn-out clause was 31.5%).

October 2010 Simon Wilkinson, UK-Cheshire, Chief Executive Officer and member of the Board of Directors of Myriad Group AG disclosed that as a result of the grant of employee options, his holding in the Company had gone above the 3% threshold to 3.73% as of October 20, 2010 (holding as of December 31, 2009 below 3%). UBS Fund Management, CH-Basel disclosed that in Collective Investment Schemes, and as a result of purchase transactions, its holding had gone above the 3% threshold to 3.37% as of October 11, 2010 (previous holding unknown). Partners Group Holding AG, CH-Baar (and group of shareholders managed by entities which are directly/indirectly controlled by Partners Group AG, Baar-Zug) disclosed that the composition of funds holding Myriad Group AG shares had changed. The reported position was 5.95% as of October 8, 2010.

1. Group of shareholders, consisting of Vega Invest Fund PLC, Dublin, Ireland; Partners Group Access 27 L.P., Edinburgh, Scotland; Partners Group Direct Investments 2006, Edinburgh, Scotland; Partners Group European Growth 2008, Edinburgh, Scotland. All of the four shareholders are managed by entities which are directly/indirectly controlled by Partners Group Holding AG, Baar-Zug, Switzerland. 2. Beneficial owners of the majority of shares in Patinex AG are Martin and Rosmarie Ebner, 8832 Wilen, Switzerland. 3. The indirect holder of the shares held by Sagem Telecommunications SA is Safran Group, 2 Boulevard du Général Martin Valin, 75512 Paris Cedex 15, France. 4. Group of shareholders consisting of FCPR Sofinnova Capital VI, FCPR Sofinnova Capital V, FCPR Sofinnova Capital IV, and Sofinnova Partners SA, Paris, France. Sofinnova Partners SA, Paris, France is the management company of the four shareholders mentioned. 5. Participation includes shares (2.70%) and employee options (1.03%).


Myriad Group AG Annual Report 2010

Earlybird Verwaltungs GmbH, DE-Munich disclosed that it had sold its entire remaining holding in Myriad Group AG as of September 30, 2010. Patinex AG, CH-Wilen disclosed that it held 6.65% in Myriad Group AG as of September 30, 2010 (holding as of December 31, 2009 below 3%).

August 2010

Myriad Group AG, CH-Dübendorf disclosed that its sale position due to granted stock options in conjunction with employee options amounted to 5.62% and the sale position due to the outstanding convertible bond amounted to 0.2% as of July 19, 2010.

June 2010 Earlybird Verwaltungs GmbH, DE-Munich disclosed that as a result of a capital increase by the Company, its holding had gone below the 10% threshold to 9.19%. Published as of June 9, 2010 (holding as of December 31, 2009 including shares from earn-out clause was 13.4%).

January 2010 Partners Group Holding AG, CH-Baar (and group of shareholders managed by entities which are directly/ indirectly controlled by Partners Group AG, Baar-Zug) disclosed that as a result of sale transactions, its holding had gone below the 15% threshold to 14.76% as of January 6, 2010 (holding as of December 31, 2009 including shares from earn-out clause was 16.8%).

The Company is not aware of any shareholders’ agreements.

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

Pursuant to article 3a of the Articles of Incorporation, dated May 25, 2010, the share capital of Myriad Group AG may be increased through the issuance of a maximum of 3,770,590 registered shares, each fully paid-in, with a nominal value of CHF 0.10 each, in the maximum aggregate amount of CHF 377,059.00 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 25, 2010, 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.

Financial Report 2010

Since December 31, 2010, Sofinnova Partners SA, FR-Paris and Partners Group Holding AG have both further reduced their shareholdings to each of them holding below 5% of the outstanding share capital as of the end of February 2011. Further details on the disclosure notices in fiscal year 2010 and 2011 can be accessed on the reporting platform of SIX Swiss Exchange under: http://www.six-swiss-exchange. com/shares/companies/major_shareholders_en.html

Conditional and authorised share capital in particular Conditional share capital

Corporate Governance

July 2010

As of December 31, 2010, the Company has an ordinary share capital of CHF 4,856,061.10, consisting of 48,560,611 registered shares with a nominal value of CHF 0.10 each. 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 Company has no authorised capital at December 31, 2010.

Business Review

Partners Group Holding AG, CH-Baar (and group of shareholders managed by entities which are directly/indirectly controlled by Partners Group AG, Baar-Zug) disclosed that as a result of sale transactions, its holding had gone below the 10% threshold to 9.88% as of August 18, 2010.

2. Capital structure Share capital

Overview

September 2010

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Myriad Group AG Annual Report 2010

Authorised share capital As part of the Purple Labs transaction in April 2009, the contribution agreement included an earn-out clause that would provide Purple Labs SA shareholders with an 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 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 4,368,474 earn-out clause shares were issued on March 29, 2010. As of March 31, 2010, the number of outstanding ordinary shares amounted 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 authorised capital declined in accordance with this capital increase and amounted to CHF 526.90, consisting of 5,269 registered shares with a nominal value of CHF 0.10 each. 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. The issuance of this remaining authorised capital was possible until June 30, 2010. It was not used and as of December 31, 2010, the Company has no authorised capital outstanding.


Myriad Group AG Annual Report 2010

The tables below set forth the changes in the capital of the last three reporting periods. Ordinary share capital

Overview

Changes in capital

11

Date CHF 2,000,680

February 2008

CHF + 10,2261

June 2008

CHF + 72,0141

January – December 2008

CHF + 47,9382

Capital as of December 31, 2008

CHF 2,130,858

January 2009

CHF + 321,0791

January – December 2009

CHF + 1,4642

March 2009

CHF + 1,965,8133

Capital as of December 31, 2009

CHF 4,419,214

March 2010

CHF + 436,8471

Capital as of December 31, 2010

CHF 4,856,061

Business Review

Capital as of December 31, 2007

Conditional share capital Date CHF 271,659

January – December 2008

CHF – 47,9382

Capital as of December 31, 2008

CHF 223,721

January – December 2009

CHF – 1,4642

March 2009

CHF + 175,3023

May 2009

CHF + 50,0006

Capital as of December 31, 2009

CHF 447,559

No changes in 2010

CHF –

Capital as of December 31, 2010

CHF 447,559

Corporate Governance

Capital as of December 31, 2007

Financial Report 2010


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Myriad Group AG Annual Report 2010

Changes in capital continued Authorised share capital Date Capital as of December 31, 2007

CHF 15,498

February 2008

CHF – 10,2261

May 2008

CHF + 200,0004

June 2008

CHF – 72,0141

December 2008

CHF + 241,3345

Capital as of December 31, 2008

CHF 374,592

January 2009

CHF – 321,0791

March 2009

CHF + 383,8613

Capital as of December 31, 2009

CHF 437,374

March 2010

CHF – 436,8471

June 2010 remaining capital forfeited

CHF – 527

Capital as of December 31, 2010

CHF –

1. Shares issued out of authorised capital 2. Shares issued based on the exercise of stock options and conversion rights 3. 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, 2009 4. Increase authorised capital as approved by General Meeting of Shareholders on May 15, 2008 5. Increase authorised capital as approved by General Meeting of Shareholders on December 15, 2008 6. Increase conditional capital as approved by General Meeting of Shareholders on May 19, 2009

Shares and participation certificates As of December 31, 2010, the ordinary share capital of Myriad Group AG consists of 48,560,611 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, 2010, Myriad Group AG had no convertible bonds. As of December 31, 2010, Myriad Group AG had outstanding stock options granted to members of the Board of Directors, Senior Management and employees. For detailed information please refer to Note 6 “Employee compensation and benefits” in the notes to the consolidated financial statements. The total of outstanding options can be exercised into 3,600,283 shares of the Company, which represents 7.41% of the outstanding share capital.


Myriad Group AG Annual Report 2010

As of December 31, 2010, the Company’s Board of Directors consists of five members. With the exemption 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.

The non-executive members of the Board of Directors do not have significant business connections with Myriad Group AG or its subsidiaries. Hans-Ulrich Müller (Partners Group Holding AG) is a representative of a significant shareholder. At the Ordinary General Meeting of Shareholders held on May 25, 2010, all Board members were re-elected in individual elections for a term of office of one year. In addition to the five current members of the Board of Directors, Rolf P. Jetzer, Roland Manger and Jean Schmitt were also re-elected for a one year period at the same

Function Chairman Born/nationality 1953, Dutch citizen First elected 2009 End of term 2011 Committees Chairman of Compensation and Nominating Committee, Member of Audit Committee

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. Other activities and vested interests Loek van den Boog is Chief Strategist of Vallstein Beheer B.V., Chairman of Human Inference, Netherlands, member of the Board of Directors of Patni Computer Systems Ltd., India and serves as Chairman of Net4kids Aid Foundation, Chairman of Luma International NV, Belgium.

Financial Report 2010

Professional and educational background Loek van den Boog has been 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,

Jean Schmitt, who had represented the interests of Sofinnova Partners SA, FR-Paris (and related investment funds), decided to step down from the Board in December 2010, as Sofinnova Partners had reduced their holdings in the Myriad Group AG during November and December 2010 and controlled below 10% of the Company’s shareholding as of December 31, 2010 (see also section 1 “Significant Shareholders” in this Corporate Governance Report).

Corporate Governance

Loek van den Boog

Roland Manger, who had represented the interests of Earlybird Verwaltungs GmbH, DE-Munich, decided to step down from the Board in November 2010, as Earlybird had sold its entire position in Myriad Group AG during September 2010 (see also section 1 “Significant Shareholders” in this Corporate Governance Report).

Business Review

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.

Shareholders’ Meeting. Rolf P. Jetzer passed away unexpectedly in September 2010 and was succeeded as Chairman of the Board by Loek van den Boog. Hans-Ulrich Müller informed the Board of Directors in January 2011 that he will not stand for re-election at the next Annual General Meeting in May 2011, when his current term of office will expire. Mr. Müller represents the interests of Partners Group Holding AG, CH-Baar (and related investment funds), which had reduced their holdings in Myriad Group AG during the second half of 2010 to slightly above 5% and in January 2011 to below 5% (see also section 1 “Significant Shareholders” in this Corporate Governance Report).

Overview

3. Board of Directors Members of the Board of Directors

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Myriad Group AG Annual Report 2010

Michel Paulin

Hans-Ulrich Müller Function Vice-Chairman Born/nationality 1946, Swiss citizen

Function Board member Born/nationality 1960, French citizen

First elected 1999

First elected 2009

End of term 2011 Committees Member of Compensation and Nominating Committee

End of term 2011 Committees Member of Compensation and Nominating Committee, Chairman of Audit Committee

Professional and educational background 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. Other activities and vested interests Mr. Müller is a member of the Board of Directors of U-Blox Holding AG.

Michel Bon

Professional and educational background 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. Other activities and vested interests Michel Paulin is a Board Member of Xchanging, a UK public company, and a Board Member of BULL a French public company.

Simon Wilkinson Function Board member Born/nationality 1943, French citizen First elected 2005 End of term 2011 Committees Member of Audit Committee

Professional and educational background 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. Other activities and vested interests Michel Bon is Chairman of Devoteam and Chairman of the Supervisory Board of Editions du Cerf. He is senior advisor to Roland Berger. Mr. Bon is a member of the Board of Directors of Lafarge and SONAE.

Function Board member, Chief Executive Officer Born/nationality 1965, UK citizen First elected 2009 End of term 2011 Committees None Professional and educational background For the details on the Curriculum Vitae and other activities and vested interests of Simon Wilkinson, please refer to section “Senior Management Team” on page 18 of this Annual Report.


Myriad Group AG Annual Report 2010

According to the Company’s Articles of Incorporation, dated May 25, 2010, 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 General Meeting of Shareholders in 2010, the Board members were elected in individual election procedures.

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. Loek van den Boog has been acting as Chairman of the Board of Directors since September 2010 (previously Rolf P. Jetzer). Vice-Chairman throughout the entire year

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 Board of Directors may remove and replace individual members at any time. All members of the AC must be determined by the Board of Directors as being fully independent and financially literate, and at least one member must have accounting or financial management expertise. No member of the AC shall serve on the audit committee of more than two other public companies. AC members shall not receive any consulting, advisory or other compensation fees from the Company other than for AC, Board or other Board Committee mandates. The AC shall meet at least once a year prior to the annual general meeting of shareholders. In addition, the AC shall meet whenever a meeting is requested by one of its members or as it may deem necessary. In financial years 2009 and 2010, the AC usually met on a quarterly basis. 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 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 Board of Directors may remove and replace individual

Financial Report 2010

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

Corporate Governance

Based 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 prior to the start of the business year. This is at least four times a year, but the Board may meet additionally as often as the Company’s affairs require. In financial years 2009 and 2010, the Board of Directors usually met on a monthly basis.

Committees of the Board of Directors Business Review

Internal organisational structure Allocation of tasks within the Board of Directors

2010 has been Hans-Ulrich Müller. Committee memberships: Loek van den Boog acted as Head of the AC during 2010. Effective January 1, 2011, he became Head of the CNC, and relinquished the role as Head of the AC to Michel Paulin. Loek van den Boog remained a member of the AC. Michel Paulin acted as Head of the CNC during 2010. Effective January 1, 2011, he became Head of the AC and relinquished his role as Head of the CNC to Loek van den Boog. Michel Paulin remained a member of the CNC. Hans-Ulrich Müller was and still is a member of the CNC. Michel Bon was and still is a member of the AC.

Overview

Elections and terms of office

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Myriad Group AG Annual Report 2010

members at any time. All members of the CNC shall be independent of management and free from any business or other relationship which could interfere with the exercise of their independent judgment. The CNC meets as often as the business and affairs of the Company require a meeting and whenever it is requested by one of its members, but at least twice a year. In financial years 2009 and 2010, the CNC usually met on a quarterly basis. 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 all bonus, employee share option and other incentive 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 duties listed in the Organisational Regulations, “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 Committees In financial year 2010, the Board of Directors and the Committees met as follows: • B  oard of Directors: 9 meetings, 3 telephone conferences • Audit Committee: 2 meetings, 3 telephone conferences • Compensation and Nominating Committee: 5 meetings, 1 circular resolution The average duration for the meetings has typically been between five and six hours for Board meetings, up to three hours for Audit Committee and up to 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. In financial year 2010, the following meetings were attended by members of Senior Management: • C  EO: 12 Board meetings/telephone conferences, 1 AC meetings, 2 CNC meetings

• CFO: 12 Board meetings/telephone conferences, 5 AC meetings, 0 CNC meetings • CCO: 8 Board meetings/telephone conferences, 0 AC meetings, 0 CNC meetings

 reas of responsibility of the Board of A 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: • C  hange of the Company’s accounting principles (currently IFRS) • Change of the Company’s business activities • Issue of the Company’s internal policies (particularly regarding insider trading, use of e-mail and nondiscrimination, 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: • E  xecution 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


Myriad Group AG Annual Report 2010

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:

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 at least between eight to ten meetings per year, with additional informal meetings or teleconferences to be held as required between the Directors and the Chairman.

At Board meetings, all members of the Board of Directors may request information as to the general course of business as well as to particular business matters. Outside

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. The organisational internal control system (ICS) is integrated into the operating procedures accompanying business process activity, being performed before or after an activity. Internal controls are integrated components of business processes; they are not summarised in a separate ICS function. The ICS is operated on all levels within the Myriad Group and requires a high measure of individual responsibility of all employees. The ICS procedure: • Focuses on key risks and key controls • Ensures processes, risks and controls are documented appropriately • Maintains adequate and traceable documents • Reports to the Audit Committee at least once a year The ICS is applied for processes material to the financial statement. These include: • • • • • • •

Order to cash Procure to pay Payroll Financial closing procedure Intangible assets Consolidation Information Technology

The risk and control inventories are assessed regarding completeness and up-to-datedness and adjusted if necessary during the financial year. In parallel, the controls assessment regarding design and operating effectiveness is performed. Although the controls are listed and assessed individually regarding their effectiveness, a conclusion is taken by risk area. If necessary, measures for optimising the controls are implemented.

Financial Report 2010

The Chief Executive Officer and Chief Financial Officer attend all meetings of the Board of Directors reporting on the individual items mentioned above. The Chief Commercial Officer participates at some of the meetings of the Board of Directors. For details of the attendance see work methods of the Board of Directors and Committees 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.

To the extent necessary to fulfil its duties, each Board member may request from the Chairman, at or outside meetings, that books and records be disclosed to it. In the event that the Chairman rejects a request for information or inspection for reason of business secrecy, the Board of Directors shall decide.

Corporate Governance

• F  inance 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

The members of the Board of Directors may request information from the Board of Directors as a whole, the Compensation and Nominating Committee, the Audit Committee, any other committee appointed by the Board (if such exist), individual Board members, the members of the management, and all employees of the Company who independently carry out management duties.

Business Review

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:

meetings, each Board member may request information as to the general course of business and, with the approval of the Chairman, as to particular business matters.

Overview

• 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 • Responsibility for implementing the risk management and control principles as defined by the Board of Directors

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Myriad Group AG Annual Report 2010

4. Senior Management As of December 31, 2010, the Senior Management (Executive Team) of the Company consists of ten members.

Simon Wilkinson Function Chief Executive Officer, Member of the Board of Directors Born/nationality 1965, UK citizen First appointed 2009

Professional and educational background Simon 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, he worked for Philips in senior international sales roles from January 1996 to February 2000, and then raised venture funding of USD 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 interests Simon Wilkinson is a member of the Board of Directors of Myriad Group AG. He is a member of the Board of Directors of Mobilaris AB.

James Bodha Function Chief Financial Officer Born/nationality 1967, UK citizen First appointed 2009

Professional and educational background James Bodha serves as Chief Financial Officer of Myriad since September 2009. He has over 13 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 interests None

Malcolm Dawe Function Chief Product Officer Born/nationality 1952, UK citizen First appointed 2009

Professional and educational background Malcolm 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 Dawe has a Bachelor of Science Degree (Hons) in Physics from Owens University, Manchester and a Diploma in Management Studies from East Anglia University. Other activities and vested interests None


Myriad Group AG Annual Report 2010

Function Chief Commercial Officer Born/nationality 1961, US citizen First appointed 2009

Other activities and vested interests None

Benoit Schillings

First appointed 2009

Professional and educational background Benoit 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

Gary Bunney Function SVP & General Manager Device Solutions Division Born/nationality 1954, UK citizen First appointed 2010

Professional and educational background Gary Bunney joined Myriad Group as Senior Vice President & General Manager of the Device Solutions Division in September 2010. In this capacity, he is responsible for product development and worldwide professional services of the Division. Gary Bunney has over 25 years of experience in the IT industry, with the last 15 years focused exclusively on the telecommunications market. Prior to joining Myriad, Mr. Bunney was 8 years at Intec Telecoms PLC, a provider of billing and OSS products to 450 operators worldwide, from 2000 to 2009. Most recently, he was Chief Operating Officer and main Board Director responsible for Product Management, R&D and Professional Services. He also played a lead role in negotiating and integrating many of Intec’s acquisitions. From 1994 to 2000, Gary Bunney was Managing Director of a specialist telecoms software products division within Fujitsu/ICL and earlier had a successful 14 year sales and sales management career in ICL. Gary Bunney holds a BA honours degree from New York University in English Literature. Other activities and vested interests None

Financial Report 2010

Function Chief Technology Officer Born/nationality 1963, Belgian citizen

Other activities and vested interests None

Corporate Governance

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

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

Business Review

Professional and educational background Steve 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 and corporate development. 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 the Vice President and General Manager of 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).

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.

Overview

Steve Langkamp

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Myriad Group AG Annual Report 2010

Michael Brady Function SVP & General Manager Mobile Services Division Born/nationality 1953, Irish citizen First appointed 2010

Professional and educational background Michael Brady joined Myriad Group as Senior Vice President & General Manager of the Mobile Services Division in September 2010. In this capacity, he is in charge of the overall strategy and development of the division. Michael Brady has over 25 years of experience in the telecoms and internet industries with a strong track record in the mobile and IT sectors. Prior to joining Myriad, Mr. Brady was CEO of Cibenix from 2006 to 2010, after joining as COO in 2004, successfully driving a business at the forefront of delivering mobile internet solutions into Tier 1 wireless operators. Previously, Michael Brady was CEO at Anam from 1999 to 2004 and with SSE/Siemens as CEO from 1989 to 1999. Michael Brady holds a BSc degree in Physics from University College Dublin. Other activities and vested interests None

Gordon Tsang Function SVP Sales & General Manager Asia Born/nationality 1966, Hong Kong citizen First appointed 2009

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. Other activities and vested interests Gordon Tsang is an external Board Member of Eflow Inc

James Robins Function SVP Marketing Born/nationality 1966, UK citizen First appointed 2010

Professional and educational background James Robins joined Myriad Group as Senior Vice President of Marketing in June 2010. He is in charge of all marketing activities of Myriad. From 2006 to 2010, he was Senior Vice President of Marketing for SpinVox the global leaders in speech-to-text messaging solutions deployed by network operators and unified communication service providers around the world. James Robins was responsible for the design, deployment and commercialisation of products and services on a global basis. Previously, James Robins held senior marketing, strategy and operational roles with Orange PCS (from 2000 to 2006), PA Consulting Group (from 1996 to 2000), The Automobile Association (from 1993 to 1996) and NEC (from 1990 to 1993). Other activities and vested interests None

Professional and educational background Gordon Tsang is General Manager of Asia & Senior Vice President of Sales for Device Solutions Division 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 for Device Solutions Division products worldwide. He also supervises the China offices and represents Myriad’s interests in Asia from his base in Tokyo. 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


Myriad Group AG Annual Report 2010

21

Function VP Human Resources Born/nationality 1957, UK citizen First appointed 2010

Other activities and vested interests

Personnel changes in the Senior Management Following the acquisition of Purple Labs by Esmertec, creating Myriad Group AG, there were several changes in the Senior Management in financial year 2009 (for details please refer to page 29 of the Annual Report 2009 – available on http://www.myriadgroup.com/Investors/ Financial-Publications.aspx). During the financial year 2010, the Senior Management team was expanded by appointment of Gary Bunney, Michael Brady, James Robins and Liz Hitchen.

The compensation takes into account the responsibilities of each member (Chairman of the Board of Directors, Committee Chairman or Committee member). The compensation is not tied to particular company targets. The fee for the mandate as a member of the Board of Directors and/or Committee is paid in cash as fixed compensation. In order to align Board compensation also with the Company’s strategy and long-term shareholders’ interest, the Board members additionally receive long-term incentives in the form of stock options. If such options are granted, they usually have a vesting period of (i) 1/3 vesting 12 months after grant date and (ii) 1/36 on each of the following 24 months. On resignation from the Board any options that have vested have an exercise period of 6 months from date of leaving (12 months in the event of death or serious illness), and any unvested options lapse (except in the event of death or serious illness, where at the discretion of the Board they may vest immediately). In the financial year 2010, the non-executive members of the Board of Directors received compensation in cash and in options. For financial year 2010, the Board of Directors set the amounts of fixed compensation as follows: • Board of Directors: • Chairman CHF 100,000, (2009 CHF 100,000) • Member CHF 30,000, (2009 CHF 30,000) • Audit Committee (in addition to compensation as a Member of the Board): • Head of AC CHF 20,000, (2009 CHF 20,000) • Compensation and Nomination Committee in addition to compensation as a Member of the Board): • Head of CNC CHF 10,000, (2009 CHF 10,000)

Financial Report 2010

Apart from Simon Wilkinson and Gordon Tsang, 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.

The compensation for each Non-Executive member 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 entirely at its own discretion.

Corporate Governance

Other activities and vested interests None

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 Directors

Business Review

Professional and educational background Liz Hitchen joined Myriad Group AG as Vice President of Human Resources in March 2010 and is responsible for Human Resources activities globally. She has over 8 years of senior HR management experience with a successful track record in establishing and leading HR functions, developing HR Strategy, and personal development. Most recently, Liz was HR Director Europe for Fellowes Ltd., a US based office machinery company from 2007 to 2010. During her time in that role, she was responsible for building and leading a European HR function, developing an international HR strategy and leading a talent management programme as part of the company’s global strategy. Prior to Fellowes, she led HR EMEA for Intervoice Ltd., a global consultancy that advises the telecoms, financial and travel industries from 2002 to 2007. Liz held several HR management roles at computer firm ICL from 1986 to 2002, and has a background in training and employee development. Liz Hitchen is a Management and Business graduate of Manchester Metropolitan University (MMU) and holds a B.Ed from City of Liverpool College.

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

Overview

Management contracts

Liz Hitchen


22

Myriad Group AG Annual Report 2010

The number of options granted for Board roles is set as follows: • Chairman 30,000 • Member 10,000 • The fair value of the granted options for the Board members reached between 62% and 70% compared to their fixed compensation. Fixed compensation for Board roles remains unchanged from 2009.

Compensation for the members of Senior Management The Compensation and Nominating Committee (“CNC”) reviews and approves the remuneration of the members of Senior Management. The compensation of Senior Management consists of a basic salary (in cash) that reflects their individual business responsibilities and is defined at the end of the previous year (or in the employment contract in case of new members of Senior Management joining the Company during the year) and is adjusted during the reporting period only by exception. The compensation also contains a performance-related bonus that is determined once a year by the CNC, and inclusion in the Group Stock Options Scheme as a long term incentive. In the financial year 2009, the CNC considered separate bonuses for the first and second half of 2009, given the creation of Myriad at the start of Q2, 2009. The Senior Management team bonus for the first half of 2009 was based on the performance of the separate companies relative to target. Since the second half of financial year 2009 and for the entire financial year 2010, the cash bonus for each member of Senior Management was based on both Group Turnover and EBITDA results and individual Key Performance Indicators (KPIs) specific to the area for which that individual is responsible. In 2010, the range of weightings of these components across the Senior Management team was: (i) 60% to 80% of total bonus (2009: 25% and 50%) for achievement of Revenue and EBITDA (ii) 20% to 40% of total bonus (2009: 0% – 25%) for achievement of individual KPI’s The on target bonus paid is between 30% and 100% of the base salary. Bonus payments have no minimum or maximum limits. Examples of the KPIs used for individual members of the Senior Management team include product delivery, development and delivery of products and market strategies, bookings targets and Company integration, restructuring and cost saving metrics.

In determining and approving the compensation for the Senior Management, the Compensation and Nominating Committee uses the industrial background (technology, software, telecommunications sector) and professional experience of its members and decides entirely at its own discretion. No external advisors were consulted in respect of structuring the compensation for the Senior Management team. The split between basic salary and bonus depends on the particular management position. There are no other allowances. However, the compensation also contains local taxes relevant to social insurance. For the financial year 2010, the on target bonus component as a percentage of the basic salary was 100% for the CEO. Due to over achievement of targets, the bonus amount paid in 2010 represented 158% of the basic salary. The on target bonus component for other members of senior management was between 30% and 50% of the basic salary. The bonus amounts paid in 2010 represented between 13% and 137% of the basic salary. In addition, the Board of Directors, upon recommendation of the Compensation and Nominating Committee, approves the grant of stock options to the Senior Management for the purpose of retaining key contributors. Stock options granted during financial year 2010 vest as follows: (i) For eligible persons being granted with stock options for the first time (for example as sign-on grants), 1/3 of the options vest 12 months after the grant date and 1/36 vests on each of the 24 consecutive months. (ii) In financial year 2010, 210,000 options were granted as first time grants (sign-on) to 4 members of the Senior Management (2009 500,000 options to 2 members), and 1,450,000 options were granted as subsequent grants to 6 members of the Senior Management (2009: 581,800 options to 3 members). 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. The employment contracts with the current members of Senior Management do not contain any specific termination pay. Notice periods range between 3 and 6 months. Any outstanding share options not vested at the end of employment lapse, vested options have six month post the end of the employment date to exercise before lapsing (twelve months in the event of death).


Myriad Group AG Annual Report 2010

23

7. Changes of control and defence measures Duty to make an offer

Compensation, shareholdings and loans

Clauses on changes of control

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 33 1/3% of the voting rights of the Company is reached (see Art. 32 of the Federal Act on Stock Exchanges and Securities Trading).

6. Shareholders’ participation Voting rights and representation restrictions

During September 2010, 1,000,000 share options were issued to some of the Senior Management which vest in the event of a change of control during the two years following the date of issue. The options shall vest in proportion to the share price or the equivalent of a share price realised in the event of a Change of Control at a range between 25% of the options at a share price of CHF 3.00 and 100% of the options at a share price of CHF 5.00 or above. The remaining, unvested percentage of the options shall lapse. At the end of the qualifying period, or in the event of the Senior Management member leaving (except in the event of death or serious illness and at the discretion of the Board), the options lapse.

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

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 19, 2011, the closing date for the share register has been set for the period commencing on May 6, 2011 and ending on May 20, 2011.

At the Annual General Meeting of Shareholders, held on May 25, 2010, the Board of Directors proposed to the shareholders the election of PricewaterhouseCoopers AG, Zurich (“PWC”) as new auditors of the Company. The shareholders followed the proposal and appointed PWC as the Company’s independent public accountants for financial year 2010 and until the next Annual General Meeting. PWC was registered in the Commercial Register of the Canton of Zurich as the Company’s auditors on June 10 2010. Martin Kennard has been the lead auditor for the year 2010. KPMG AG, Zurich (“KPMG”) acted as the auditors of the Company for financial years 2001 to 2009. Upon recommendation of the Audit Committee, the Board of Directors decided to propose a new audit firm to the General Meeting of Shareholders for the following reasons:

Financial Report 2010

Shareholders who together hold shares with a nominal value of at least 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.

8. Auditors Duration of the mandate and term of office of the lead auditor

Corporate Governance

The employment contracts of the Senior Management members and the members of the Board of Directors do not provide for any change of control clauses and the notice periods remain unaffected by a change of control event.

Business Review

Details to 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 69 to 71.

Overview

No termination payments were made during the financial year 2010. During the financial year 2009, Thomas Hornung stepped down as CEO of the business. As part of the agreement, Mr Hornung was granted a 12-months notice period and full vesting of options. Further details of the settlement agreements, and details of remuneration and indirect benefits of key management are shown in Note 6 “Employee compensation and benefits” in the notes to the consolidated financial statements.


24

Myriad Group AG Annual Report 2010

• KPMG had been auditors of the Company for nine successive years. • The lead auditor at KPMG had been responsible for the mandate since the audit of 2003 and would have to be rotated in any case (following the seven years rotation frequency according to Swiss Code of Obligations). • With a new Senior Management in place at Myriad Group AG, the Board felt it appropriate to review the audit relationship in general and initiated a tender process, involving as two potential candidates for the audit mandate KMPG and PWC. In evaluating and selecting PricewaterhouseCoopers as the new auditors to be proposed for election at the General Meeting of Shareholders, the Audit Committee and the Board of Directors put particular importance to: • The global network of the new auditor. • Independence of the auditor with regards to other business relations with Myriad Group (no business relations existed). • The auditors’ capabilities with regards to support for technology oriented companies. • The auditors’ particular understanding of risks in the mobile phone/mobile internet markets.

Auditing fees For the financial year 2010, PWC charged the Company auditing and audit-related fees amounting to CHF 289,230 (USD 310,300).

Additional fees PWC charged the Group additional fees of CHF 215,101 (USD 216,717) during the financial year 2010 for tax advisory services.

Information tools pertaining to the external audit The Audit Committee is, on behalf of the Board of Directors, responsible for supervising the activities performed by the external auditors. It reviews the engagement letter of the auditors, the fees and the terms of the planned audit work once per year. The results of the annual audit of the annual accounts are discussed in detail with the external auditors. The auditors usually perform a detailed audit report on the financial year results and a financial review on the half-year results.

In financial year 2010, the previous auditors KPMG performed a detailed audit report on the FY 2009 report, whose findings and conclusions were discussed with the new auditors PWC in an Audit Committee meeting held in December 2010. PWC had 3 meetings with the Audit Committee during the entire financial year 2010 and KPMG had 1 meeting with the Audit Committee in 2010. The audit plan by PWC for financial year 2010 was approved by the Audit Committee in December 2010. Any non-audit services or additional audit work to be performed by the auditors have to be pre-approved by the Audit Committee for final approval by the Board. The Audit Committee assesses the qualification, independence and performance of the external auditors as well as the coordination and interaction between the Company and the auditors. The Audit Committee thereby considers various criteria, including operational understanding of the Company’s business (especially the mobile phone/mobile internet markets), sufficient resources set aside by the auditors, independence, global network of the auditors, understanding of the risks of a technology company and the particular business risks of Myriad Group, practical recommendations and support, co-operation with the Audit Committee and with Senior Management. The Audit Committee and Senior Management closely monitor the proportion between the auditing fee for the annual financial statements and the additional non-audit services performed by the auditors. The Audit Committee examines potential consequences regarding the independence of the auditors. During the financial year 2010, the Audit Committee and the Board of Directors concluded that the independence of the auditors was fully ensured at all times. The Audit Committee also evaluates the effectiveness of the auditors in accordance with the Swiss law and with regards to the audit of the Company’s consolidated financial statements that are prepared in compliance with International Financial Reporting Standards (IFRS). It then makes a recommendation to the entire Board of Directors with regards to the preferred audit firm. Upon this recommendation, the Board of Directors itself verifies once per year the selection of the potential auditors, in order to propose its preferred audit firm for election to the shareholders at the General Meeting of Shareholders. 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.


Myriad Group AG Annual Report 2010

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 in an annual report and on a half-year basis. The Company also publishes by media release condensed financial information for the first and third quarter of the financial 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/FinancialPublications.aspx

Business Review

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. The presentations that are used at analysts/media conferences or during conference calls are also available under the same web link as the financial reports (link see above).

Overview

9. Information policy

25

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

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

Financial Report 2010

For investor relations contacts and a summary of anticipated key dates in 2011 please refer to page 73 of this Annual Report.

Corporate Governance

The Company website www.myriadgroup.com contains extensive information on the business activities, Company structure, financial reports, media releases, investor relations, etc.


26

Myriad Group AG Annual Report 2010

Management discussion and analysis of results Financial Overview USD‘000

Revenue Gross profit2 Gross margin in % EBITDA before restructuring charges EBITDA margin in % EBITDA before restructuring charges3 EBITDA5 EBIT without exceptional charges & income EBIT Net result Operating cash flow Cash and cash equivalents Shareholders’ equity Equity ratio in % Total headcount at year end (FTE) Market capitalisation (CHF‘000)

FY 2010 IFRS

100,975 67,332 66.7% 11,298 11.2% 29,560 4,282 (13,123) (27,554) (32,872) (7,654) 33,737 61,980 48.1% 5184 242,803

FY 2009 Pro forma1

125,806 86,412 68.7% 24,977 19.9% 24,977 15,658 (3,331) (48,125) (51,351) 24,001 33,235 96,560 56.2% 778 214,332

FY 2009 IFRS

105,378 71,226 67.6% 16,464 15.6% 16,464 8,974 (10,052) (53,017) (55,696) 25,493 33,235 96,560 56.2% 778 214,332

Executive Financial Summary Myriad’s financial results for the year ended 31 December 2010 were significantly impacted by the early termination of the contract with SAGEM Wireless in September 2010. Revenues for 2010 were down USD 24.8 million (19.7%) to USD 101.0 million (USD 125.8 million in FY 2009) which included a USD 22.9 million decline in revenues with SAGEM Wireless. EBITDA (before restructuring charges and exceptional income) was down 54.8% to USD 11.3 million. Net loss was USD 32.9 million (USD 51.4 million in FY 2009) reflecting one-off restructuring charges of USD 7.0 million relating to resizing of the cost base, USD 25.7 million of intangible impairments directly relating to the write off of goodwill and IP associated with the terminated SAGEM Wireless contract, and amortisation and depreciation charges of USD 24.4 million offset by a one off gain of USD 18.3 million relating to the sale of certain IP assets. Underlying cash flow from operations was an outflow of USD 7.7 million. This reflected the loss of contractual payments in advance from SAGEM Wireless following the contract termination. Net cash generated from investing activities was USD 14.5 million mainly due to USD 18.3 million net sale proceeds from the sale of certain patents. As a result the Group’s liquidity continued to be strong as of 31 December 2010 with cash and cash equivalents of USD 33.7 million.

Revenues Total Group licence revenues declined USD 6.2 million (8.6%) to USD 65.5 million. This reflected a year on year decline of USD 6.7 million in SAGEM Wireless licence revenues offset by a USD 0.5 million increase in revenues with other customers. Total Group service revenues also declined USD 18.6 million (34.5%) to USD 35.4 million which included a USD 16.2 million year on year decline in revenues with SAGEM Wireless. The decline in service revenues with other customers of USD 2.4 million reflected the completion of several deployments earlier in the year. SAGEM Wireless also affected the geographical spread of our revenues, with EMEA representing 57.1% of total revenues in 2010. Device Solutions Division (DSD) revenues were most impacted by the SAGEM Wireless situation and amounted to USD 90.7 million. The loss of the SAGEM Wireless business accounted for the decline. While underlying revenues were stable, growth in software revenues for set top boxes and Blu-ray players was particularly encouraging as an emerging market for Myriad. 1. 2009 pro forma results are shown as if Myriad’s acquisition of Purple Labs had closed on January 1, 2009. Myriad management believes that pro forma financial information for 2009 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. Gross profit before amortisation and impairment. 3. Including profit from IP sale of USD 18.3 million. 4. 2010 year end headcount excludes 75 remaining heads whose cost was transferred to SAGEM Wireless from November 1, 2010 under the contract termination agreement. 5. Including restructuring charges excluding profit from IP sales of USD 18.3 million.


Myriad Group AG Annual Report 2010

27

Overview

The Mobile Services Division (MSD) revenues were USD 10.3 million (-20.6%). This is mainly due to pricing pressure for Myriad’s USSD solution as well as continued slippage in the closure of material orders. Management expects an improvement in revenues for this division in the first half of 2011. Whilst a major order for Myriad’s new mobile messaging solution was secured in 2010 with the Latin American subsidiary of Telefónica, no revenues were recognised as the contract was in a network deployment stage for the second half of 2010. Management expects material revenues from this contract to be delivered in the second half of 2011 following first network deployments from Q1 2011.

Cost of revenues and gross margins Cost of licence revenues as a percentage of revenue increased year on year and gross margin came to 88.2% (94.3% in 2009). This reflected an increase in the mix of Java licences which carry a substantial third party licence fee relative to non Java licences which carry no third party fees.

Research and Development Research and Development expenses (R&D) gross amounted to USD 32.6 million or 32.3% of total revenues (USD 39.1 million and 31.1% of revenue in 2009). The reduction in R&D expenses largely reflected a lower level of European spend within the Device Solutions Division, together with a redeployment of engineering resources to China to reduce the cost of innovation within the Group. As a result, headcount in our China offices grew by 49 FTEs to 203 employees during the year. Within the Mobile Services Division gross R&D investment grew USD 3.7 million or 172.5% year on year reflecting costs to build the new social messaging platform. Management considers the historic levels of gross R&D investment as a percentage of revenue to be relatively high reflecting a programme to refresh technology. Future rates of investment should be reduced to a lower range of 20-25% of revenues that is needed to sustain growth.

Sales and marketing Whilst the terminated SAGEM Wireless contract accounted for approximately a third of Myriad revenues, the ongoing levels of sales and marketing resource required to support this revenue stream were relatively minimal having secured the contract in 2008. As Myriad seeks to replace these revenues, investment in sales and marketing has increased substantially by USD 4 million or 42.3% to USD 13.3 million (USD 9.4 million in 2009). Investment has been made in both the size and quality of the sales teams in the Device Solutions Division and Mobile Services Division as well as in marketing capability. Management are confident this investment will secure long term growth for the Group in addressed markets.

Corporate Governance

R&D capitalisation increased marginally by USD 1.4 million to USD 6.0 million or 18.2% of gross R&D expenses. This represents a modest level of capitalisation of total R&D spend in line with management’s continued conservatism in the capitalisation of R&D to avoid future potential write offs and understatement of operational expenses.

Business Review

Cost of service revenues as a percentage of revenue also increased. The gross margin in the service business reached 26.9% (34.8% in 2009). This reflected a decline in service revenue volumes in both the DSD and MSD which despite reductions in services headcount, management were unable to offset.

General and administrative

Restructuring expenses Restructuring expenses reflect the cost of programmes implemented by management to downsize the cost base of the Group. Specifically USD 5.8 million was spent to reduce the engineering teams in Europe including a significant reduction in office space. In addition a further USD 1.2 million was provided to reduce back office function costs (as referenced in the G&A section). Management estimate the annualised savings arising from this restructuring to be approximately USD 23.0 million per annum.

Financial Report 2010

General and administrative expenses (G&A) were reduced substantially by USD 6.5 million or 27.2% to USD 17.5 million (USD 24.0 million in 2009). As a result G&A as a percentage of revenues declined by two percentage points to 17.3% despite the decline in total revenues. The reduction reflects significant management efforts to rationalise back office costs through the consolidation of Finance, IT and HR functions as well as through the closure and shrinkage of offices to more cost-effectively manage Myriad operations globally. In addition the implementation of new, global reporting and accounting systems together with strong operational review processes has further tightened controls over cost and cash management.


28

Myriad Group AG Annual Report 2010

Management discussion and analysis of results continued

Other income and expenses Other income of USD 0.6 million (USD 6.0 million in FY 2009) comprised grant income for R&D projects in France. At an absolute level, grant income was USD 2.1 million lower than in the prior year. Due to a change in French tax legislation during 2010, the R&D tax credits previously reported in ‘Other income’ of USD 3.3 million in 2010 (Half Year Report) has been reclassified to ‘Taxes’ (the 2009 corresponding credit being USD 3.6 million). The French tax legislation change does not require a reclassification of prior year R&D tax credit although an adjustment is needed for year on year comparison of EBITDA.

EBITDA EBITDA (before restructuring charges) amounted to USD 11.3 million (USD 25.0 million in 2009). The EBITDA margin compared to the previous year declined by 8.7% to 11.2% for the fiscal year 2010.

Amortisation and impairment of intangible assets The amortisation of intangible assets amounted to USD 23.4 million (USD 26.9 million in 2009) and mainly reflects the amortisation of intellectual property (‘IP’) related to the former Cellicium, Purple Labs and SAGEM Wireless 2G organisations. Myriad decided to record a non-cash impairment charge in 2010 of USD 25.7 million (USD 35.5 million in 2009) to reduce the carrying value of goodwill and other intangible assets. The impairment relates solely to the write down of intangible assets associated with the terminated SAGEM Wireless contract within the Device Solutions Division. More explanation regarding the impairment is provided in Note 11 to the financial statements.

Operating loss (EBIT) The EBIT before exceptional charges amounted to USD (13.1) million (USD (3.3) million in 2009). The exceptional charges during the fiscal year 2010 included the restructuring costs related to the downsizing of the engineering and back office functions, the impairment of SAGEM Wireless related IP and the one time sales of certain IP which together totalled USD 14.4 million (USD 44.8 million in 2009).

Finance income and expenses Finance income of USD 0.2 million (USD 0.2 million in 2009) primarily comprises interest earned on cash and investments. Financial expenses of USD (3.2) million (USD (3.6) million in 2009) primarily reflect foreign exchange losses of USD 2.6 million and interest expenses of USD 0.5 million (USD (0.8) million and USD (1.2) million in 2009 respectively).

Net loss As a result of the above mentioned one-time charges and further expenses related to the financial results, net loss of fiscal year 2010 amounted to USD 32.9 million (net loss USD 51.4 million in 2009).

Cashflow1 Net cash used in operating activities was USD 7.7 million during the year (USD 24.0 million generated from operating activities in 2009). The outflow was primarily driven by the loss of advanced payments from SAGEM Wireless (which existed at 31 December 2009) following the related contract termination in September 2010. Net cash generated from investing activities was USD 14.5 million (net cash of USD 12.9 million used in 2009). The significant cash inflow reflected the one time sale of certain IP in July 2010 which raised net proceeds of USD 18.3 million, offset by net investments in plant, property and equipment and IP of USD 2.6 million, sale of marketable securities USD 4.7 million, and additions to intangibles and development costs USD 6.0 million.

Liquidity and capital resource As a result of the one-time IP sale in July offsetting the loss of substantial advanced payments from SAGEM Wireless, Myriad’s liquidity has remained stable and strong throughout 2010, declining by only USD 4.2 million through the fiscal year. At 31 December 2010, the balance of cash and cash equivalents as well as short-term investments and marketable securities was USD 33.7 million (USD 38.0 million at 31 December 2009). The net cash position (cash and cash equivalents and short term investments and marketable securities less interest bearing debt) improved by USD 1.2 million to USD 30.5 million at year end 2010 (USD 29.3 million at year end 2009). Shareholders’ equity decreased to USD 62.0 million reflecting net losses during the fiscal year 2010 with an equity ratio of 48.1% at 31 December 2010 (56.2% at 31 December 2009). Myriad continues to be well capitalised and financially solid to pursue its corporate strategy in 2011 and in the years to come. 1. Comparison refers to 2009 pro forma results


Myriad Group AG Annual Report 2010

29

Consolidated income statement Year ended 31 December USD’000, except for per share information

Note

2010

2009

Licence revenue Service revenue

65,530 35,445

59,012 46,366

Total revenue

100,975

105,378

Cost of licence revenue Cost of service revenue

(7,723) (25,920)

(4,054) (30,098)

Total cost of revenue

(33,643)

(34,152)

67,332

71,226

(23,374) (25,677)

(25,303) (35,476)

Gross profit before amortisation and impairment Amortisation of intangible assets Impairment of intangible assets

11 11

Research and development, net of capitalised costs Sales and marketing Doubtful debt expense General and administrative Other income and expenses Restructuring and integration costs Profit on sale of intangible assets

18,281

14

5

Loss from operations Finance income Finance costs

7 7

Loss before income tax Income tax (expense)/benefit

8

Basic and diluted loss per share (USD)

(26,680) (13,338) (219) (17,480) 636 (7,016) 18,262

(28,178) (8,326) (893) (22,377) 3,799 (7,489) –

(27,554)

(53,017)

249 (3,234)

156 (3,199)

(30,539)

(56,060)

(2,333)

364

(32,872)

(55,696)

(0.69)

(1.47)

9

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

Corporate Governance

Loss for the year attributable to owners of the parent

10,447

Business Review

Gross profit

Overview

Myriad Group AG, Dübendorf

Financial Report 2010


30

Myriad Group AG Annual Report 2010

Consolidated statement of comprehensive income Year ended 31 December USD’000

Note

Loss for the year

2010

(32,872)

2009

(55,696)

Other comprehensive income: Exchange differences on translating foreign operations Change in fair value of financial assets, net of tax Other comprehensive income for the year, net of tax Total comprehensive loss for the year attributable to owners of the parent

(3,170) –

12

(3,170) (36,042)

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

6,914 (464) 6,450 (49,246)


Myriad Group AG Annual Report 2010

31

Consolidated balance sheet USD’000

ASSETS Non-current assets Furniture and equipment Intangible assets Long-term investments and other financial assets Deferred tax asset

10

2,587 60,038 1,551 228

2,286 105,558 1,459 –

64,404

109,303

406 30,218 – 33,737

864 23,774 4,718 33,235

64,361

62,591

128,765

171,894

5,210 175,794 36 (36,495) (82,565)

4,259 194,412 36 (18,957) (83,190)

61,980

96,560

2,320 717 607 8,339

3,670 360 1,021 6,243

11,983

11,294

933 40,451 1,087 2,064 10,267

4,985 26,747 876 4,806 26,626

54,802

64,040

66,785

75,334

128,765

171,894

11 12 20

13 14 15 16

TOTAL ASSETS EQUITY AND LIABILITIES Equity attributable to owners of the parent Share capital Share premium Cumulative change in fair value of financial assets Cumulative translation adjustment Accumulated losses

17

Total equity attributable to owners of the parent Liabilities Non-current liabilities Loans and borrowings Trade and other payables Pension liabilities Deferred tax liabilities Current liabilities Loans and borrowings Trade and other payables Current income tax liabilities Advances received Deferred revenue Total liabilities TOTAL EQUITY AND LIABILITIES

18 21 19 20

18 21

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

Financial Report 2010

2009

Corporate Governance

2010

Business Review

Current assets Inventories Trade and other receivables Short-term investments and marketable securities Cash and cash equivalents

Note

Overview

At 31 December


32

Myriad Group AG Annual Report 2010

Consolidated statement of changes in equity

USD’000

Share capital

Share premium

Changes in fair value of financial assets

Balance at 1 January 2009

2,019

103,335

500

(15,559)

(34,543)

55,752

238

10,074

(464)

(3,398)

(55,696)

(49,246)

Total comprehensive loss for the year Transaction with owners, recorded directly in equity Offsetting of accumulated losses against share premium Shares issued in connection with exercised stock options (Note 17) Shares issued in connection with business combinations (Note 26) Cost of share capital increases Stock option expense

2,001 – –

Total transactions with owners Balance at 31 December 2009 Total comprehensive loss for the year

Accumulated losses

Total equity

7,049

49

86,575 (139) 1,568

– – –

– – –

– – –

2,002

81,003

7,049

90,054

4,259

194,412

36

(18,957)

(83,190)

96,560

540

13,828

(17,538)

(32,872)

(36,042)

1

(7,049)

Cumulative translation adjustment

48

88,576 (139) 1,568

Transaction with owners, recorded directly in equity Offsetting of accumulated losses against share premium Shares issued in connection with business combinations (Note 26) Stock option expense

(33,497)

33,497

411 –

(411) 1,462

– –

– –

– –

– 1,462

Total transactions with owners

411

(32,446)

33,497

1,462

Balance at 31 December 2010

5,210

175,794

36

(36,495)

(82,565)

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

61,980


Myriad Group AG Annual Report 2010

33

Consolidated statement of cash flows USD’000

Note

2010

2009

24,421 25,677 – 1,462 (427) 219 (2,890) 85 (18,262) 2,985 2,333

26,515 35,476 1,533 1,568 195 893 – 97 – 936 (364)

(Increase)/decrease in trade and other receivables Decrease in inventories Increase/(decrease) in trade and other payables (Decrease)/increase in deferred revenue Income taxes received

2,731 (9,152) 413 14,161 (18,462) 2,655

11,153 18,107 440 (16,646) 11,873 566

Net cash (used)/generated from operating activities

(7,654)

25,493

(1,708) (929) (5,956) 165 18,262 4,718 – (110) 12

(1,533) (959) (4,768) 5 – (4,096) 20,965 653 17

Net cash generated from investing activities

14,454

10,284

Cash flows from financing activities Repayment of borrowings Proceeds from borrowings Proceeds from issue of share capital Cost of share capital increases Interest paid

(4,979) – – – (818)

(5,530) 553 49 (139) (680)

(5,797)

(5,747)

Cash flows from investing activities Purchases of furniture and equipment Purchases of intangible assets Capitalised development costs Proceeds from sale of furniture and equipment Proceeds from sale of intellectual property Decrease/(increase) in short-term investments and marketable securities Cash inflow from acquisition, net (Increase)/decrease in financial assets Interest received

Net cash used in financing activities

10,11 11 12 6 14

8

10 11 11

17

Net increase in cash and cash equivalents

1,003

Cash and cash equivalents at beginning of year Effect of exchange rate fluctuations on cash and cash equivalents

33,235 (501)

Cash and cash equivalents at end of year

33,737

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

30,030 3,330 (125) 33,235

Financial Report 2010

(55,696)

Corporate Governance

(32,872)

Business Review

Cash flows from operating activities Loss for the year Adjustments for: Depreciation and amortisation Impairment of intangible assets Impairment of financial assets Non-cash stock option expense (Decrease)/increase of employee benefits Increase of bad debt reserve Other non-cash income Loss on disposal of furniture and equipment Profit on disposal of intangible assets Finance income and costs Income tax expense/(benefit)

Overview

Year ended 31 December


34

Myriad Group AG Annual Report 2010

Notes to the consolidated financial statements The Myriad Group (‘Myriad’ or ‘the Group’) consists of Myriad Group AG (‘the Company’), a company incorporated in Dübendorf, Switzerland, and its consolidated subsidiaries. Myriad Group AG (ticker: MYRN) shares are quoted on the SIX Swiss Exchange (SIX). The consolidated financial statements are presented in US dollars (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 flows are denominated to a large extent in USD.

The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

2.1 Basis of preparation The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and the requirements of Swiss law. The consolidated financial statements have been prepared under the historical cost convention except for items which are required to be accounted for at fair values.

2.1.1 Going concern

2.1.2 Changes in accounting policy and disclosures (a) New and amended standards adopted by the Group The accounting policies used for the consolidated financial statements are consistent with those used for the previous year. The following new standards, amendments to standards or interpretations are mandatory for the first time for the financial year beginning 1 January 2010: IFRS 3 (revised), ‘Business combinations’, and consequential amendments to IAS 27, ‘Consolidated and separate financial statements’, IAS 28, ‘Investments in associates’, and IAS 31,

IFRIC 17, ‘Distributions of non-cash assets to owners’, effective for annual periods beginning on or after 1 July 2009. This is not currently applicable to the Group, as it has not made any non-cash distributions. IFRIC 18, ‘Transfers of assets from customers’, effective for transfer of assets received on or after 1 July 2009. The interpretation did not have a material impact on the Group’s financial statements. Improvements to International Financial Reporting Standards 2009 were issued in April 2009. The effective dates vary standard by standard but most are effective 1 January 2010. The improvements did not have a material impact on the Group’s financial statements. (b) New and amended standards and interpretations mandatory for the first time for the financial year beginning 1 January 2010 but not currently relevant to the Group (although they may affect the accounting for future transactions and events) The following new standards, amendments to standards and interpretations are mandatory for the first time for the financial year beginning 1 January 2010 but are not currently relevant for the Group: ‘Additional exemptions for first-time adopters’ (Amendment to IFRS 1) was issued in July 2009. The amendments are required to be applied for annual periods beginning on or after 1 January 2010. This is not relevant to the Group, as it is an existing IFRS preparer. (c) New standards, amendments and interpretations issued but not effective for the financial year beginning 1 January 2010 and not yet early adopted The following new standards, new interpretations and amendments to standards and interpretations have been issued but are not effective for the financial year beginning 1 January 2010 and have not been early adopted:

Financial Statements

The directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. The Group therefore continues to adopt the going concern basis in preparing its consolidated financial statements.

IAS 39 (amendments), ‘Financial instruments: Recognition and measurement’. The amendments did not have a material impact on the Group’s financial statements.

Corporate Governance

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in note 3.

IFRS 2 (amendments), ‘Group cash-settled share-based payment transaction’ (effective from 1 January 2010). In addition to incorporating IFRIC 8, ‘Scope of IFRS 2’, and IFRIC 11, ‘IFRS 2 – Group and treasury share transactions’, the amendments expand on the guidance in IFRIC 11 to address the classification of group arrangements that were not covered by that interpretation. The new guidance did not have a material impact on the Group’s financial statements. Business Review

2. Summary of significant accounting policies

‘Interests in joint ventures’, are effective prospectively for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after 1 July 2009. The amendments did not have a material impact on the Group’s financial statements.

Overview

1. General information


Myriad Group AG Annual Report 2010

IFRS 9, ‘Financial instruments’, effective for annual periods beginning on or after 1 January 2013, though earlier adoption is permitted. The standard addresses the classification and measurement of financial assets. This is not currently relevant to the Group.

IAS 32 (amendment), ‘Classification of rights issues’, effective for annual periods beginning on or after 1 February 2010, though earlier adoption is permitted. This is not currently relevant to the Group. IFRIC 14 (amendment), ‘Prepayments of a minimum funding requirement’, effective for annual periods beginning on or after 1 January 2011, though earlier application is permitted. This is not currently relevant to the Group as no voluntary prepayment of minimum funding contributions in respect of future service have been made.

IAS 12 (amendments), ‘Income taxes’, effective for annual periods beginning on or after 1 January 2012. The amendments are not currently expected to have a material impact on the Group’s financial statements.

2.2 Consolidation Subsidiaries are all entities over which the Group has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases. The Group uses the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair value of the assets transferred, the liabilities incurred and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a

2.3 Segment reporting Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. In accordance with the management structure and the reporting made to the Board of Directors (the Group’s chief operating decision maker), the operating 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. Information on segment assets and liabilities is not provided to the Board.

2.4 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 net foreign exchange result is disclosed in the finance income or finance cost line. Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency’). The consolidated financial statements are presented in US dollars (‘USD’), which is the Group’s presentation currency. The results and financial position of all Group entities (none of which has the currency of a hyper-inflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows: ■■

■■ ■■

assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet income and expenses for each income statement are translated at average exchange rates equity items for each balance sheet presented are translated at the closing rate at the date of that balance sheet

Financial Report 2010

Improvements to International Financial Reporting Standards 2010 were issued in May 2010. The effective dates vary standard by standard but most are effective 1 January 2011. The improvements are not currently expected to have a material impact on the Group’s financial statements.

Inter-company transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated.

Corporate Governance

IFRIC 19, ‘Extinguishing financial liabilities with equity investments’, effective for annual periods beginning on or after 1 July 2010. This is not relevant to the Group as no equity instruments have been issued to extinguish any financial liabilities.

The excess of the consideration transferred is recorded as goodwill. If the cost of the acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the income statement.

Business Review

Revised IAS 24, ‘Related party disclosures’, effective for annual periods beginning on or after 1 January 2011, though earlier adoption is permitted. The revised standard is not currently expected to result in additional disclosures.

contingent consideration arrangement. Acquisition-related costs are expensed as incurred.

Overview

IFRS 7 (amendments), ‘Financial instruments: Disclosures’, effective for annual periods beginning on or after 1 July 2011. The amendments are not expected to have a material impact on the Group’s financial statements.

35


36

Myriad Group AG Annual Report 2010

Notes to the consolidated financial statements continued ■■

all resulting exchange differences are recognised in other comprehensive income.

On consolidation, exchange differences arising from translation of the net investment in the foreign operation, and of borrowings and other currency instruments designated as hedges of such investments, are taken to other comprehensive income. When a foreign operation is partially disposed of or sold, exchange differences that were recorded in equity are recognised in the income statement as part of the gain or loss on sale.

2.5 Furniture and equipment Furniture and equipment is stated at historical cost less accumulated depreciation and impairment losses. The depreciation is calculated on a straight-line basis over the following estimated useful lives: Furniture and other equipment – 5 years ■■ IT infrastructure – 3 years ■■ Office refurbishing – 10 years, or the remainder of the lease term if shorter ■■ Cars – 4 years ■■

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. Gains and losses on disposal are determined by comparing the proceeds with the carrying amount and are recognised within other income and expenses in the income statement.

2.6 Intangible assets (a) Goodwill Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net identifiable assets of the acquired subsidiary at the date of acquisition. Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Impairment losses on goodwill are not reversed. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

Software, intellectual property, customer base, and trademarks are shown at historical cost less accumulated amortisation and impairment losses. Amortisation is calculated on a straight-line basis over the following estimated useful lives:

■■ ■■ ■■

Software Intellectual property Customer base Trademarks

The Group expenses costs incurred in the preliminary project stage until the following criteria are met: ■■ ■■ ■■ ■■ ■■

■■

it is technically feasible to complete the product so that it will be available for use; management intends to complete the product and use or sell it; there is an ability to use or sell the product; it can be demonstrated how the product will generate probable future economic benefits; adequate technical, financial and other resources to complete the development and to use or sell the product are available; and the expenditure attributable to the product during its development can be reliably measured.

Thereafter development costs are capitalised as intangible assets. Capitalised development costs 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).

2.7 Impairment of non-financial assets Assets that have an indefinite useful life – for example, goodwill or capitalised development costs of products not yet released to customers – are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and 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). Non-financial assets other than goodwill that suffered impairment are reviewed for possible reversal of the impairment at each reporting date.

2.8 Financial assets

(b) Other intangible assets

■■

(c) Capitalised development costs

– 5 years – 2.5 to 7 years – 5 years – 5 years

Financial assets are classified into specified categories dependent on the nature and purpose of the financial asset and is determined at the time of initial recognition. The Group currently classifies its financial assets in the following categories: ‘loans and receivables’ and ‘available for sale’.

(a) Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than twelve months after the end of the reporting period. These are classified as noncurrent assets. Loans and receivables are measured at amortised cost using the effective interest rate method,


Myriad Group AG Annual Report 2010

(b) Available for sale financial assets

(b) Available for sale financial assets The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset is impaired. For debt securities the Group uses the criteria referred to in (a) above. In the case of equity investments classified as available for sale, a significant or prolonged decline in fair value of the security below its cost is also

2.11 Trade and other receivables Trade receivables are stated at contracted amounts less any allowance for doubtful debts. Additions to the provision for doubtful debts are made based on the specific identification of accounts where collection is considered to be at risk. Trade receivables 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 doubtful debts is reduced when the account is recovered or written off.

2.12 S  hort-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 tradeable securities and are stated at nominal value, which approximates to their fair value.

2.13 Cash and cash equivalents Cash and cash equivalents includes cash in hand, deposits at call with banks, other short-term highly liquid investments with original maturities of three months or less.

2.14 Financial liabilities The Group currently classifies its financial liabilities as ‘other financial liabilities’.

Financial Report 2010

The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset is impaired. A financial asset is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset that can be reliably estimated. The amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. The carrying amount is reduced and the amount of the loss is recognised in the income statement. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor’s credit rating), the reversal of the previously recognised impairment loss is recognised in the income statement.

Inventories are stated at the lower of cost and net realisable value. Cost is determined using the first in, first out method and comprises direct materials and, where applicable, direct labour costs and overheads that have been incurred in bringing inventory to its present location and condition. Net realisable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses.

Corporate Governance

2.9 Impairment of financial assets (a) Loans and receivables

2.10 Inventories Business Review

Available for sale financial assets are non-derivatives that are either designated in this category or not classified in any other categories. They are included in non-current assets unless the investment matures or management intends to dispose of it within twelve months of the end of the reporting period. Available for sale financial assets are initially recognised at fair value. Gains and losses arising from changes in fair value are recognised in other comprehensive income with the exception of impairment losses and foreign exchange gains and losses on monetary assets, which are recognised directly in the income statement as other income and expenses. In the absence of an active market, and where fair value cannot be reliably measured by other means, available for sale financial assets are measured at cost. The Group’s available for sale financial assets comprise certain long-term investments and other financial assets.

evidence that the assets are impaired. If any such evidence exists for available for sale financial assets, the cumulative loss - measured as the difference between the acquisition cost and the current fair value, less any impairment loss previously recognised in the income statement – is removed from equity and recognised in the income statement. If, in a subsequent period, the fair value of the available for sale financial asset increases and the increase can be related objectively to an event occurring after the impairment was recognised, the reversal of the previously recognised impairment loss is recognised in the income statement.

Overview

less any impairment. Interest income is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial. The Group’s loans and receivables comprise certain long-term investments and other financial assets, trade and other receivables, short-term investments and marketable securities, and cash and cash equivalents.

37


38

Myriad Group AG Annual Report 2010

Notes to the consolidated financial statements continued

Other financial liabilities are measured at amortised cost using the effective interest rate method, with interest expense recognised on an effective yield basis. The Group’s other financial liabilities comprise loans and borrowings, and trade and other payables.

2.15 Loans and borrowings Loans and borrowings are recognised initially at fair value, net of transaction costs incurred. Loans and borrowings are subsequently carried at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is 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. Loans and borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least twelve months after the balance sheet date.

2.16 Employee benefits – pension obligations Group pension funds in favour of employees are maintained in the United Kingdom (UK), the United States of America (USA), China, Switzerland and France. 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 employee benefit expense when they are due. The Group has no further payment obligations once the contributions have been paid. 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 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 year’s service and the age of an employee. The liability recognised in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets, together with adjustments for unrecognised past-service costs. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of the related pension obligation. 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 defined benefit obligation, whichever is higher (the ‘corridor’ approach). 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. Current service costs are recognised immediately 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.

2.17 Current and deferred income tax The tax benefit or expense for the period comprises current and deferred tax. Tax is recognised in the income statement, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Company and its subsidiaries operate and generate taxable income. Deferred income tax is recognised, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. Deferred tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred tax liability is settled. Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred


Myriad Group AG Annual Report 2010

2.18 Provisions

■■

Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and the amount can be reliably estimated.

2.19 Share-based payments

2.20 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

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 instalment payment terms. 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 Division Standard 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

Financial Report 2010

■■

Device Solutions Division Standard 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.

Corporate Governance

The fair value of the employee services received in exchange for the grant of options is recognised as an expense. The total amount to be expensed is determined by reference to the fair value of the options granted. The fair value of the 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 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.

Business Review

Employees (including Senior Executives and members of the Board of Directors) receive remuneration in the form of stock options.

■■

upgrades or enhancements, are additional elements and are initially 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.

Overview

income tax assets and liabilities relate to income tax levied by the same taxation authority on either the same taxable entity or different taxable entities when there is an intention to settle the balances on a net basis.

39


40

Myriad Group AG Annual Report 2010

Notes to the consolidated financial statements continued

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 based on an estimated percentage of completion as work progresses. Where revenue is recognised in advance of amounts being invoiced the difference is shown as accrued income in trade and other receivables. 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.

3. Critical accounting estimates and judgements Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The Group makes estimates and assumptions concerning the future. The resulting accounting estimates may not equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed below.

(a) 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 48,970,000 at 31 December 2010, as disclosed in note 11.

(b) Capitalisation of development costs Once the criteria set out in note 2.6(c) have been met the Group capitalises related development costs until such time as the customer product incorporating the software is commercialised, at which time capitalisation ceases. 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. The Group has capitalised development costs with a net value of USD 9,915,000 at 31 December 2010, as disclosed in note 11.

(c) Estimated useful life of intangible assets Intangible assets are amortised over estimated useful life of between 2.5 and 7 years. Estimated useful life is based on the Group’s operating experience. As the Group 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 11.

(d) Employee stock option expense The determination of the value of employee 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.

(e) Income tax At 31 December 2010, the net liability for current income taxes is USD 1,087,000 and the net liability for deferred income taxes is USD 8,111,000, as disclosed in note 20. 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 income tax charge.


Myriad Group AG Annual Report 2010

41

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. The present value of the defined benefit obligation is mainly impacted by assumptions on the mortality rates and the 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 31 December 2010 the recognised pension liability is USD 607,000, as disclosed in note 19.

Overview

(f) Pension liabilities

4. Segment reporting

a) Device Solutions Division: includes activities of the embedded software platforms and middleware products including browser, messaging and Jbed Java Virtual Machine clients and related services. b) Mobile Services Division: the Group provides mobile operators with network service platforms and software for mass market phones including the extensive service portfolio in the Unstructured Supplementary Service Data (USSD) business and the Xumii social messaging platform. Segment information is as follows: USD’000

Device Solutions Division

Mobile Services Division

Total Myriad Group

2009

2010

2009

Licence revenue Service revenue

62,614 28,036

54,512 37,867

2,916 7,409

4,500 8,499

Total Revenue

90,650

92,379 10,325

EBITDA Amortisation Impairment Profit on sale of intangible assets Depreciation

13,413

9,094

(9,131)

2010

2009

65,530 59,012 35,445 46,366

12,999 100,975 105,378 (120)

4,282 8,974 (23,374) (25,303) (25,677) (35,476) 18,262 – (1,047) (1,212)

Loss from operations Finance income Finance costs

(27,554) (53,017) 249 156 (3,234) (3,199)

Loss before income tax

(30,539) (56,060)

Corporate Governance

2010

1

Business Review

Management has determined that the operating segments based on the reports reviewed by the Board of Directors (the Group’s chief operating decision maker) that are used to make strategic decisions are as follows:

1. EBITDA is earnings before interest, tax, depreciation, amortisation, impairment and profit on sale of intangible assets

The following table summarises revenue by geographic region based on customers’ location. USD’000

EMEA   Switzerland   France   Other EMEA Americas   United States of America   Other Americas Asia Pacific   Korea   Other Asia Pacific Total

2010

% share

2009

% share

– 40,517 17,141

0.0% 40.1% 17.0%

591 55,904 17,384

0.5% 53.1% 16.5%

11,179 2,039

11.1% 2.0%

9,018 2,067

8.6% 1.9%

13,579 16,520

13.4% 16.4%

11,149 9,265

10.6% 8.8%

100,975

100.0%

105,378

100.0%

Financial Report 2010

The Group has not disclosed segmental information in respect of segment assets as this information is not provided to the chief operating decision maker.


42

Myriad Group AG Annual Report 2010

Notes to the consolidated financial statements continued

SAGEM Wireless represented approximately USD 36 million of the Group’s revenue (2009: USD 59 million). There is no other single customer whose revenue amounts to 10% or more of the total revenue of the Group. The following table summarises furniture and equipment and intangible assets by geographic region based on their location and allocation respectively: USD’000

2010

% share

2009

% share

EMEA   Switzerland   France   UK Americas Asia Pacific

7,640 52,349 1,613 290 733

12.2% 83.6% 2.6% 0.4% 1.2%

8,402 89,782 9,191 4 465

7.8% 83.3% 8.5% 0.0% 0.4%

Total

62,625

100.0%

107,844

100.0%

Assets allocated to France include Goodwill (USD 17,203,000) and Intellectual property (USD 31,357,000).

5. Restructuring and integration costs 2010 On 29 June 2010, it was agreed that Myriad would transfer a team of 24 engineers to TR COM (Time Reversal Communications), a subsidiary of SAGEM Wireless. Payments were made to TR COM and SAGEM Wireless of USD 600,000 and USD 2,800,000 respectively. On 21 September 2010, it was announced that SAGEM Wireless was terminating its contractual agreement with Myriad with immediate effect. As part of a settlement agreement it was agreed that the majority of Myriad employees that served the SAGEM business were to be offered jobs outside of Myriad. Under this agreement, all associated employee and associated establishment costs from 1 November 2010 until cessation of employment by Myriad would be reimbursed by SAGEM. A restructuring charge of USD 1,000,000 was incurred by Myriad for employment costs relating to these employees from the date of the announcement until 31 October 2010. Separately, management has continued to reorganise and restructure the Group as part of a cost rationalisation exercise. This has mainly impacted upon engineering and back office support functions with a total cost incurred of USD 2,616,000, of which USD 2,216,000 relates to personnel costs associated with 35 employees across engineering and back office, with a further USD 400,000 related to office consolidation.

2009 Following the acquisition of Purple Labs SA, management decided to reorganise and restructure the Group. This resulted in an immediate reduction in 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 totalled USD 7,489,000 and primarily comprise final compensation for terminated employees as well as consulting fees related to the process and costs of terminated leases.

6. 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 USD’000

2010

2009

Salaries and wages Social taxes Pension cost (see note 19) Capitalised development costs Other personnel related costs Stock option expenses

46,178 8,091 3,393 (5,956) 2,508 1,462

42,034 8,303 1,747 (4,768) 2,281 1,568

Total expenses

55,676

51,165

Included in personnel expenses shown above are the following amounts in respect of remuneration for Senior Management and the executive member of the Board of Directors.


Myriad Group AG Annual Report 2010

43

Overview

Remuneration: 2009

2010 Options (at fair value)

Bonus

Expense allowance

Options (at fair value)

Total

3,174

1,537

91

1,329

6,131

3,174

1,537

91

1,329

6,131

Total

Annual salary

49

377 4,275

49

377 4,275

USD’000

Annual salary

Bonus

Expense allowance

Key management

2,319

1,530

Total

2,319

1,530

Indirect benefits: 2009

2010

Pensions

Tax paid

Total

342

502

102

82

686

342

502

102

82

686

Pensions

Tax paid

Key management

340

2

Total

340

2

USD’000

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.

Business Review

Total

Social insurance

Social insurance

Remuneration of non-executive members of the Board of Directors: 2009

2010

Board of Directors

285

90

Total

285

90

USD’000

Cash Total compensation

Options (at fair value)

Total

375

460

388

848

375

460

388

848

Other legally required disclosure on key management compensation is included in the notes to the statutory financial statements of Myriad Group AG.

(b) Stock option plans All employees of the Group are eligible to receive stock options.

Corporate Governance

Cash compensation

Options (at fair value)

The stock options are granted at regular Board meetings at an exercise price equivalent to the stock market closure price of the Company shares on the grant day, for free shares at an exercise price of zero. All options grant employees the right to purchase one Company 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.

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 on the acquisition of Purple Labs SA by Myriad Group AG. All outstanding options are covered by the conditional share capital.

Financial Report 2010

For eligible persons being granted with stock options, 1/3 of the options vest 12 months after the grant date and 1/36 vests on each of the 24 consecutive months.


44

Myriad Group AG Annual Report 2010

Notes to the consolidated financial statements continued

The following table details the movements of outstanding employee stock options from 1 January until 31 December: ‘000

2010

2009

Opening balance at 1 January

2,702

1,119

Granted Exercised Lapsed

1,340 – (442)

2,048 (15) (450)

Ending balance at 31 December

3,600

2,702

2,238 CHF 0.52 – CHF 7.84 CHF 0.00 – 18.60

717 CHF 2.00 CHF 4.73 CHF 8.59 CHF 0.00 – 18.60

– thereof vested and exercisable Weighted average fair value of options granted Weighted average exercise price of options exercised Weighted average exercise price of options lapsed Exercise prices for options outstanding at year-end

The following tables summarises the employee stock options outstanding as at 31 December 2010 and 2009, respectively: Expiry dates Options Outstanding at 31 December 2010 (‘000)

437 1,003 5 296 100 6 50 150 500 20 20 9 220 20 340 34 16 258 24 16 4 4 21 21 22 4 3,600

Exercise Price

CHF 0.00 CHF 0.10 CHF 0.86 CHF 3.14 CHF 3.21 CHF 3.30 CHF 4.27 CHF 4.45 CHF 4.49 CHF 4.55 CHF 4.57 CHF 4.77 CHF 4.90 CHF 5.11 CHF 5.15 CHF 5.70 CHF 5.98 CHF 6.29 CHF 6.70 CHF 8.25 CHF 8.50 CHF 8.80 CHF 9.50 CHF 9.55 CHF 10.00 CHF 18.60  

2011

2012

2013

1,000

3

2014

2015

2016

2019

314

123

2020

5 296 100 4

2 50 150 500 20 20

9 22

68 340 22

130 20

12

16 258 24 16 4

16

4 21 21 6

1,041

75

4 22

30

1,158

403

531

340


Myriad Group AG Annual Report 2010

45

CHF 0.00 CHF 0.10 CHF 0.86 CHF 3.14 CHF 3.30 CHF 4.45 CHF 4.49 CHF 4.77 CHF 4.90 CHF 5.15 CHF 5.70 CHF 5.98 CHF 6.20 CHF 6.29 CHF 6.70 CHF 8.25 CHF 8.50 CHF 8.80 CHF 9.50 CHF 9.55 CHF 9.97 CHF 10.00 CHF 10.15 CHF 18.60

2012

2013

2014

2015

2016

2019

271 3 5 296 4

4 5 500

150

104 90 32

340 88

39

16 15 361 24 33 10 4 81 156 31 16

10 8 6

136

291

109

1,605

411

150

At 31 December 2010, non-executive members of the Board of Directors held 176,000 employee stock options at exercise prices ranging from CHF 0.10 to CHF 10.00 per share (2009: 282,000 employee stock options at exercise prices ranging from CHF 4.90 to CHF 10.00 per share). The time limit to exercise options already vested, which is normally 90 days, has been extended to 360 days for one member of the Board of Directors.

Corporate Governance

2,702

2011

Business Review

271 3 5 296 8 155 500 104 90 340 159 16 15 361 24 33 10 4 81 156 31 26 8 6

Exercise price

Overview

Expiry dates Options outstanding at 31 December 2009 (‘000)

At 31 December 2010, executive management members held 2,291,800 employee stock options at exercise prices ranging from CHF 0.00 to CHF 5.15 per share (2009: 1,016,019 employee stock options at exercise prices ranging from CHF 3.40 to CHF 5.15 per share).

Dividend yield Expected volatility Historical volatility Risk-free interest rate Expected life of option Expected exit rate

2010

2009

0.00% 67.9% – 68.1% 68.0% 1.01% – 1.33% 2 to 6.54 years 25%

0.00% 57.8% 57.8% 1.68% 5.01 years 15%

Due to the short trading history of the Company the expected volatility is based on the historical volatility of a selection of comparable companies, reflecting an assumption that this will be indicative of future trends for the Company, 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 2010 was USD 1,462,000 (2009: USD 1,568,000).

Financial Report 2010

The fair value of employee 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. Inputs to the model are as follows:


46

Myriad Group AG Annual Report 2010

Notes to the consolidated financial statements continued

7. Finance income/costs USD’000

2010

2009

Interest income Other finance income

232 17

121 35

Finance income

249

156

Interest expense Other finance costs Impairment of financial assets Foreign exchange losses, net

(506) (132) – (2,596)

(928) (164) (1,533) (574)

Finance costs

(3,234)

(3,199)

Total, net

(2,985)

(3,043)

8. Income tax USD’000

2010

2009

Current income tax: Current tax on profits for the year Adjustments in respect of prior years

45 100

(1,128) –

Total current income tax Deferred income tax

145 (2,478)

(1,128) 1,492

Total income tax (expense)/benefit

(2,333)

364

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 reconciles the loss before income tax per the income statement to the income tax benefit, computed using the applicable tax rate of the headquarters, Dübendorf (Switzerland): USD’000

Loss before income tax Income tax rate of Myriad Group AG Tax benefit at Myriad Group AG income tax rate

2010

2009

(30,539) 20.85% 6,367

(56,060) 20.85% 11,688

Expenses not deductible for tax purposes Utilisation of previously unrecognised tax losses Tax losses for which no deferred income tax asset was recognised Derecognition of deferred tax asset Effect of different tax rates in foreign jurisdictions Withholding tax Effect of R&D tax credit Other

(3,946) 3,442 (9,844) (2,915) 3,285 (2,277) 3,287 268

(3,140) 1,728 (8,564) – (553) (812) – 17

Income tax (expense)/benefit

(2,333)

364


Myriad Group AG Annual Report 2010

47

Loss per share is calculated as follows: 2010

Net loss for the year attributable to owners of the parent (USD’000) Weighted average of ordinary shares outstanding during the year (‘000) Aggregate number of equivalent ordinary shares for purpose of calculating the basic and diluted loss per share (‘000) Loss per share (USD): – basic – diluted

2009

(32,872) 47,483

(55,696) 37,901

47,483

37,901

(0.69) (0.69)

(1.47) (1.47)

10. Furniture and equipment Furniture

IT infrastructure

Office refurbishing

Other equipment

Cars

Total

85 – (45) – 1

2,962 1,533 (311) 550 76

Business Review

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 31 December 2010 and 2009, respectively: 3,600,283 and 2,701,688) and from convertible bonds (total potential shares at 31 December 2010 and 2009, respectively: nil and 94,885) did not have any dilutive effect on the Group’s loss per share.

USD’000

Overview

9. Loss per share

Cost 166 461 (96) 220 19

1,121 149 – 17 12

At 31 December 2009

770

1,299

1,694

1,006

41

4,810

Reclassification Additions Disposals Translation adjustments

(153) 111 (64) 5

1,021 1,452 (963) (199)

(515) 83 (675) 71

(350) 62 (75) (9)

(3) – (47) 9

– 1,708 (1,824) (123)

At 31 December 2010

669

658

634

2,610

617 914 (166) 313 16

973 9 (4) – 28

4,571

112 419 (44) (1)

717 151 – 11

382 401 (121) 13

208 224 (3) 17

60 17 (41) 2

1,479 1,212 (209) 42

At 31 December 2009

486

879

675

446

38

2,524

Charge for year Disposals Translation adjustments

43 (59) 5

799 (806) (98)

137 (604) 61

– (47) 9

1,047 (1,567) (20)

68 (51) 3

At 31 December 2010

475

774

269

466

1,984

Net book value at 31 December 2009

284

420

1,019

560

3

2,286

Net book value at 31 December 2010

194

1,836

389

168

2,587

The above reclassification relates to the correction of asset classification in line with Group accounting policy. The Group did not have any capital commitments relating to the acquisition of furniture and equipment, other than the amounts recognised as liabilities in the balance sheet, as at 31 December 2010. The fire insurance value of furniture and equipment at 31 December 2010 amounts to USD 4,571,000 (2009: USD 8,843,500).

Financial Report 2010

Accumulated depreciation At 1 January 2009 Charge for year Disposals Translation adjustments

Corporate Governance

At 1 January 2009 Additions Disposals Acquisition of subsidiary Translation adjustments


48

Myriad Group AG Annual Report 2010

Notes to the consolidated financial statements continued

11. Intangible assets

USD’000

Cost At 1 January 2009 Additions Derecognition Acquisition of subsidiary Translation adjustments At 31 December 2009 Additions Derecognition Translation adjustments At 31 December 2010 Accumulated amortisation At 1 January 2009 Charge for year Impairment Derecognition Translation adjustments At 31 December 2009 Reclassification Charge for year Impairment Derecognition Translation adjustments At 31 December 2010

Capitalised development costs

Goodwill

Software

Intellectual property

25,965 235 –

478 329 –

27,449 395 –

6,100 – –

43,765

370

52,190

96,325

6,174

50

2,863

93

441

1

9,622

76,139

1,227

82,897

6,193

25,259

79

191,794

– (6,865)

929 –

2,638 (5,985)

– (519)

(6,476)

(215)

(1,953)

(363)

Customer base

62,798

1,941

77,597

5,311

3,117 – 29,991 –

427 194 – –

6,920 18,136 3,537 –

3,705 1,104 – –

199

20

569

86

33,307

641

29,162

4,895

3,542 – 17,278 (6,865)

– 319 – –

(3,612) 18,974 8,399 (5,985)

(1,666)

(171)

(1,021)

21,417 4,768 (1,367)

5,956 (8,962) 1,251 23,504

11,418 5,854 1,948 (1,367)

Trademarks

78 – –

– – (5) 74

Total

81,487 5,727 (1,367)

9,523 (22,331) (7,761) 171,225

37 15 – –

25,624 25,303 35,476 (1,367)

316

10

1,200

18,169

62

86,236

70 1,049 – (519)

– 3,017 – (8,962)

– 15 – –

– 23,374 25,677 (22,331)

(272)

1,365

(4)

(1,769)

45,596

789

45,917

5,223

13,589

73

111,187

Net book values at 31 December 2009

42,832

586

53,735

1,298

7,090

17

105,558

Net book values at 31 December 2010

17,202

1,152

31,680

88

9,915

1

60,038

The above reclassification of accumulated amortisation relates to the correction of the allocation of historical impairment charges.


Myriad Group AG Annual Report 2010

49

Overview

Goodwill Goodwill has been allocated to the Group’s cash generating units (“CGU”) which are identical to the Group’s operating segments, as follows: USD’000

2010

2009

Device Solutions Division Mobile Services Division

8,942 8,260

34,006 8,826

Total amount of goodwill

17,202

42,832

Impairment test The 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 determined based on future discounted cash flows.

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 18.83% (2009: 19.10%) for the Device Solutions Division and 18.68% (2009: 20.00%) for the Mobile Services Division.

Business Review

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 judgements made by management as to the probable economic development of the relevant segments.

The following parameters have been used for the calculations: 2009

2010 Growth rate (residual value)

Discount rate (post-tax)

Growth rate (residual value)

13.90% 13.90%

2.00% 3.00%

14.10% 14.10%

3.00% 1.00%

The reduced 2.00% 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, after the cessation of SAGEM Wireless contracts. The higher Mobile Services Division (MSD) growth rate of 3.00% reflects management’s expectations of additional growth arising from MSD’s portfolio of acquired and capitalised intangible assets, taking into consideration significant contracts signed in 2010.

Corporate Governance

Device Solutions Division Mobile Services Division

Discount rate (post-tax)

Sensitivity analyses of goodwill related to the Device Solutions Division: Amount of excess (+)/necessary impairment (-) in USD million depending on 11.90%

0.00% 1.00% 2.00% 3.00% 4.00% 5.00%

3.69 7.14 11.29 16.38 22.75 30.98

12.90%

(1.00) 1.80 5.12 9.11 14.00 20.12

13.90%

(5.00) (2.70) – 3.19 7.02 11.72

14.90%

(8.45) (6.53) (4.31) (1.72) 1.35 5.04

15.90%

(11.45) (9.83) (7.99) (5.85) (3.36) (0.41)

As an example: If a discount rate of 12.90% and a growth rate of 3.00% were applied in the calculation – the recoverable amount would be higher than the carrying amount of the goodwill of the CGU by USD 9.11 million.

Financial Report 2010

Growth/Discount Rate (post-tax)


50

Myriad Group AG Annual Report 2010

Notes to the consolidated financial statements continued

Sensitivity analyses of goodwill related to the Mobile Services Division: Amount of excess (+)/necessary impairment (-) in USD million depending on Growth/Discount Rate (post-tax)

0.00% 1.00% 2.00% 3.00% 4.00% 5.00%

11.90%

12.90%

13.90%

14.90%

15.90%

127.57 136.51 147.26 160.43 176.92 198.20

115.39 122.65 131.24 141.57 154.22 170.07

105.01 110.98 117.96 126.21 136.14 148.30

96.05 101.02 106.77 113.48 121.41 130.96

88.26 92.44 97.22 102.74 109.20 116.83

Intellectual property and goodwill impairment 2010 The termination of the SAGEM Wireless contract in September 2010 has driven a significant reduction in the future discounted cash flows of the DSD. After a review of the impact of reduced revenue, and after taking into consideration a smaller cost base following the restructuring of the DSD business associated with the SAGEM Wireless contracts a total impairment charge of USD 25,677,000 has been recorded in 2010. This impairment has been applied to goodwill (USD 17,278,000) associated with the DSD cash generating unit and to specific intellectual property assets associated directly with the SAGEM Wireless contracts (USD 8,399,000). A review of the latest market conditions and consideration of the appropriate parameters to be applied in the calculation of the future discounted cash flows has supported the carrying values of goodwill, intellectual property and capitalised development costs associated with the MSD cash generating unit, and no impairments are made in the year.

2009 The DSD 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 DSD, the Group had to record an impairment of USD 23,715,000 in order to reduce the historic carrying value of intangibles. In the case of the MSD, the financial performance in 2009 was poor relative to previous years. Whilst Myriad believed there are positive prospects for a turnaround in performance following reorganisation of the Division’s leadership and sales teams, the Group took an impairment of USD 9,813,000 to the carrying value of intangibles.

Analysis of impairment charge USD’000

DSD Goodwill Intellectual property Capitalised development costs Total DSD MSD Goodwill Intellectual property Capitalised development costs Total MSD Total

2010

2009

17,278 8,399 –

23,715 – 1,948

25,677

25,663

– – –

9,813 – –

9,813

25,677

35,476

Capitalised development costs impairment The total amount of development cost capitalised during the year ended 31 December 2010 amounted to USD 5,956,000 (2009: USD 4,768,000). No impairment losses have been recognised on capitalised development costs in 2010. In 2009 a review of the latest market developments triggered new estimations of future cash flows which resulted in the recognition of an impairment loss of USD 1,948,000, allocated entirely to the DSD.


Myriad Group AG Annual Report 2010

51

Overview

The Group did not have any commitments for the acquisition of intangible assets, other than amounts recognised as liabilities in the balance sheet, as at 31 December 2010.

12. Long-term investments and other financial assets USD’000

Loans and receivables Security deposits Long term loan Assets available for sale Investment in eflow Inc

2009

1,044 50

  1,043 –

1,094

1,043

457

  416

457

416

1,551

1,459

Loans and receivables include rent deposits for offices. These deposits bear interest at current market rates. The investment in eflow Inc. (incorporated in Japan) is classified as “available for sale”. Due to the absence of an active market and as fair value cannot be reliably measured by other means, the investment is measured at cost. The Group’s interest in eflow Inc equates to 9.58% (2009: 9.58%).

Business Review

Total

2010

The Group also has a 19.99% (2009: 19.99%) interest in Javaground Inc, USA. In 2009 due to the uncertain economic outlook for Javaground, management decided to write off its investment of USD 1,997,000, of which USD 464,000 was recognised in other comprehensive income and USD 1,533,000 was recognised in the income statement under finance costs. The market value of this interest is considered to be USD nil (2009: USD nil).

USD’000

2010

2009

Inventories

406

864

Total

406

864

2010

2009

14. Trade and other receivables USD’000

12,917 (3,310)

12,075 (3,371)

Net trade receivables VAT receivables Withholding tax receivables R&D tax credit receivables Other receivables Prepaid license and service fees Accrued income Prepaid mediation fees Other prepaid expenses

9,607 1,453 1,888 3,219 410 – 4,507 7,245 1,889

8,704 400 2,129 2,849 880 567 7,083 – 1,162

30,218

23,774

Total

Financial Report 2010

Trade receivables Less: allowance for doubtful debts

Corporate Governance

13. Inventories


52

Myriad Group AG Annual Report 2010

Notes to the consolidated financial statements continued

Ageing of net trade receivables: (USD’000)

2010

2009

not yet due 1-30 days overdue 31-60 days overdue 61-90 days overdue 91-120 days overdue more than 120 days overdue

5,017 3,038 1,415 49 58 30

5,880 692 727 119 291 995

Total

9,607

8,704

2010

2009

Movements in allowance for doubtful debts: USD’000

Balance at beginning of year Amounts written off Additional provisions Unused provision reversed Translation adjustments

(3,371) 64 (1,239) 1,020 216

(2,537) – (998) 105 59

Balance at end of year

(3,310)

(3,371)

The carrying amounts of the Group’s net trade receivables are denominated in the following currencies: USD’000

2010

2009

US Dollar (USD) Euro (EUR) Chinese Yuan (CNY) Other

3,535 5,069 894 109

4,387 4,177 58 82

Total

9,607

8,704

15. Short-term investments and marketable securities USD’000

2010

2009

Fixed term deposits

4,718

Total

4,718

2010

2009

Cash at banks and petty cash

33,737

33,235

Total

33,737

33,235

16. Cash and cash equivalents USD’000


Myriad Group AG Annual Report 2010

53

Overview

17. Share capital The Company’s shares are registered shares with a nominal value of CHF 0.10 each. 2009

2010 Number of shares

Share capital USD’000

Number of shares

Share capital USD’000

Issued capital at 1 January

44,192,137

4,259

21,308,584

2,019

Shares issued through exercise of employee stock options Shares issued in connection with business combinations Translation adjustment

– 4,368,474 –

– 411 540

14,631 22,868,922 –

1 2,001 238

Issued capital at 31 December

48,560,611

5,210

44,192,137

4,259

20

20

Share capital table

Thereof treasury shares

4,373,743

421

Conditional share capital at 31 December

4,475,592

480

4,475,592

431

Shares issued through exercise of employee stock options During 2010, no employee stock options were exercised. During 2009, 14,631 employee stock options were exercised resulting in net proceeds to the Company of CHF 50,764 (USD 48,050).

Business Review

Authorised share capital at 31 December

Shares issued in connection with business combinations In March 2010 the Company increased its share capital out of the authorised share capital by 4,368,474 shares in connection with the acquisition of Purple Labs SA (subsequently renamed Myriad France SAS), for the settlement of the remaining part of the earn-out portion (see note 26).

Authorised share capital Conditional share capital Of the conditional capital of CHF 447,559.20 (4,475,592 shares of CHF 0.10 each) as at 31 December 2010, 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 the Group as well as members of an Advisory Board (not established) under Group 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 the conditional capital was reserved for the exercise of conversion rights which were granted to investors in Myriad’s convertible bonds. The remaining value of the convertible bonds was redeemed in 2010.

Corporate Governance

At 31 December 2010, the authorised share capital is nil.

18. Loans and borrowings USD’000

2009

Convertible bonds Short-term loan Loan “Pensionskasse SAir Group” Bank overdraft Repayable government loans Finance lease liabilities

– 933 – – 2,308 12

1,431 4,160 41 16 3,007 –

Total

3,253

8,655

Current Non-current

933 2,320

4,985 3,670

Total loans and borrowings

3,253

8,655

Financial Report 2010

2010


54

Myriad Group AG Annual Report 2010

Notes to the consolidated financial statements continued

a) Convertible bonds The remaining value of the convertible bonds was redeemed at nominal value during 2010. The interest expense on the bond is calculated using the effective interest rate method by applying the effective interest rate of 11% (2009: 11%) to the liability component. Interest expense recognised in 2010 totalled USD 141,000 (2009: USD 322,000).

b) Short-term loan The short-term loan is denominated in USD, bears interest at a rate of 11.5% (2009: 11.5%) and is repayable in monthly instalments. The total interest expense for the year was USD 431,000 (2009: USD 840,000).

c) Repayable government loans Myriad France participates in a French R&D programme under which it receives financing from the French Government that would be repayable if the resulting technology were successfully commercialised, and is therefore shown as a repayable loan. Repayable government loans are not discounted due to uncertainty in respect of the repayment period. They are carried at the value of the original proceeds.

d) Finance lease liabilities Lease liabilities are effectively secured as the rights to the leased asset revert to the lessor in the event of default. USD’000

2010

2009

Amounts payable under finance leases: Within one year In the second to fifth years inclusive

– 13

– –

Less: future finance charges

13 (1)

– –

Present value of finance lease liabilities

12

19. Pension liability and related cost The following disclosures, relate to the Swiss and French pension plans, which qualify as funded defined benefit plans. The amounts recognised in the balance sheet are determined as follows: USD’000

Present value of defined benefit obligations Fair value of plan assets

2009

2010

1,519 (820)

4,372 (3,330)

Deficit of funded plans Unrecognised net actuarial loss Unrecognised past service cost

699 (28) (64)

1,042 (21) –

Total recognised pension liability of defined benefit plans

607

1,021

Liabilities in respect of the Korean severance fund reported within pension liabilities in 2009 (USD 360,000) are now included in other payables. The 2009 comparative in the above table has been amended to reflect this adjustment.


Myriad Group AG Annual Report 2010

55

USD’000

At 31 December

2009

4,372 – 281 298 99 122 (672) (62) (1,533) (1,544) 104 – 54

4,934 285 – 403 212 260 91 (135) (1,522) (415) (177) 386 50

1,519

4,372

The movement in the fair value of plan assets over the year is as follows: USD’000

At 31 December

2010

3,330 67 (526) 122 (672) (62) (1,533) 19 75

2009

2,718 95 1,581 260 91 (135) (1,522) 173 69

820

3,330

2010

2009

The amounts recognised in the income statement are as follows:

298 99 (67) (1,249) 5

403 212 (95) (415) –

Cost of defined benefit plans Cost of defined contribution plans

(914) 4,307

105 1,642

Total pension cost for the year (note 6)

3,393

1,747

Expected net periodic pension costs of defined benefit plans for the next financial year are CHF 196,000 (USD 210,000). Expected employer contributions for defined benefit plans for the next financial year are CHF 80,000 (USD 86,000). The principal weighted average actuarial assumptions, used for the calculation of the defined benefit obligation as well as the net periodic pension cost, were as follows:

Discount rate Expected return on plan assets Expected rate of salary increases Expected rate of pension increases

2010

2009

3.06% 3.20% 1.81% 0.50%

3.83% 3.50% 1.86% 0.50%

Financial Report 2010

Current employer service cost Interest cost Expected return on plan assets Plan curtailment Amortisation of past service cost

Corporate Governance

At 1 January Expected return on assets Employer contributions Employee contributions Benefits paid Insurance premiums Plan settlement Actuarial gain Translation adjustments

Business Review

At 1 January Net transfers Plan amendments Current employer service cost Interest cost Employee contributions Benefits paid Insurance premiums Plan settlement Plan curtailment Actuarial loss/(gain) Liabilities assumed in a business combination Translation adjustments

2010

Overview

The movement in the present value of the defined benefit obligation over the year is as follows:


56

Myriad Group AG Annual Report 2010

Notes to the consolidated financial statements continued

Assumptions regarding future mortality experience are set based on actuarial advice in accordance with published statistics and experience. Mortality assumptions for the Swiss pension plan are based on the BVG 2005 post-retirement mortality table. The five-year history of experience adjustments is as follows: USD’000

Present value of defined benefit obligation Fair value of plan assets Deficit in the plan Experience losses (gains) on plan liabilities (amount) Experience (losses) gains on plan assets (amount)

2006

(6,294) 4,374 (1,920) 11 (116)

2007

2008

2009

2010

(3,956) 2,892 (1,064)

(4,934) 2,718 (2,216)

(4,372) 3,330 (1,042)

(1,519) 820 (699)

(25)

(10)

(30)

(92)

(48)

(359)

173

19

The analysis of the plan assets and the expected rate of return at the balance sheet date were as follows:

Equity securities Debt securities Real estate Other

2010

expected return in 2010

2009

expected return in 2009

19.20% 58.90% 9.30% 12.60%

6.30% 1.80% 3.50% 3.75%

18.80% 60.90% 9.00% 11.30%

6.40% 2.25% 3.90% 1.20%

100.00%

3.20%

100.00%

3.50%

2010

2009

20. Deferred income tax USD’000

Deferred tax asset Deferred tax liabilities Deferred tax liabilities

228 (8,339)

– (6,243)

(8,111)

(6,243)

The following are the major deferred tax liabilities and assets recognised by the Group and movements thereon:

USD’000

Intangible assets (excluding Other temporary goodwill) differences

At 1 January 2009 Acquisition of subsidiary Charged/(credited) to the income statement Exchange differences Tax losses offset

(765) (6,557) (1,716) (565) 3,360

(1,140) – 5 (19) 1,154

At 1 January 2010 Charged/(credited) to the income statement Exchange differences

(6,243) (2,585) 606

– (117) –

(8,222)

(117)

At 31 December 20101

Tax losses recognised

820 – 3,203 491 (4,514)

Other deferred tax assets

Total

– – – – –

(1,085) (6,557) 1,492 (93) –

– – –

– 224 4

(6,243) (2,478) 610

228

(8,111)

1. The deferred tax assets/liabilities are calculated at the respective closing exchange rate whereas the changes in temporary differences shown in note 8 showing the components of income tax expense are calculated at the average rate of the respective year.


Myriad Group AG Annual Report 2010

57

USD’0002 Expiry date

2009

2010 2011 2012 2013 2014 2015 2016 2017

– 9,536 18,510 74,268 17,858 45 38,131 10,838

13,778 8,565 16,625 66,706 16,040 41 34,248 –

To be carried forward unlimited

43,936

21,046

Total

213,122

177,049

2. The tax losses carried forward and the deferred tax assets/liabilities are calculated at the respective closing exchange rate. Therefore, the movements in unrecognised tax loss carry forwards include currency conversion differences.

Unused tax losses referred to above are available for use in France and Switzerland where the current tax rates are 33.33% and 20.85% respectively.

Business Review

2010

Overview

At the balance sheet date the Group has unused tax losses available for offset against future profits as follows:

21. Trade and other payables USD’000

2009

Trade payables VAT and other tax related payables Other payables Restructuring costs Employee compensation related accruals Accrued mediation fees Accrued expenses

2,181 2,048 2,615 2,396 7,542 7,245 17,141

3,234 1,576 4,088 – 9,501 – 8,708

Total

41,168

27,107

Current Non-current

40,451 717

26,747 360

Total

41,168

27,107

Corporate Governance

2010

22. Operating leases

USD’000

2010

2009

Within one year In the second to fifth years inclusive After five years

2,817 1,028 –

2,917 3,812 –

Total

3,845

6,729

The amounts charged in arriving at loss from operations for the year in respect of operating leases was USD 3,083,000 (2009: USD 1,192,000).

Financial Report 2010

The Group leases various offices and equipment under non-cancellable operating lease agreements. The future aggregate minimal lease payments under non-cancellable operating leases are as follows:


58

Myriad Group AG Annual Report 2010

Notes to the consolidated financial statements continued

23. Guarantees, pledges in favour of third parties, contingent liabilities and significant termination contracts The Group’s companies may grant guarantees in the normal course of business. At 31 December 2010, performance guarantees and tender bonds had been issued to customers and prospects by the Mobile Services Division totalling USD 858,000 (2009: USD 522,592). All such bank guarantees were secured by liens in amounts 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 nil (2009: USD 28,908) is pledged in favour of UBS AG as at 31 December 2010. Following the termination of the SAGEM Wireless contracts, Myriad has embarked on restructuring the Myriad France SAS business and has incurred costs relating to the ongoing employment and establishment costs for a number of staff. Under the terms of the settlement agreement SAGEM Wireless was committed to provide employment for these people either directly or within the wider SAFRAN group of companies, and to reimburse the establishment costs, or pay redundancy costs if redeployment is not possible. At 31 December 2010 the employment of some of the people concerned had not been terminated and therefore no provisions have been recognised by Myriad for these costs. This agreement was also signed by SAGEM Telecommunications and FCPR Sofinnova Capital VI, represented by Sofinnova Partners, in support of SAGEM Wireless as shareholders. At the balance sheet date a total of Euro 2,678,000 (USD 3,603,000) was outstanding under this agreement. A payment of Euro 1,139,000 (USD 1,532,000) was received in January 2011 in part payment of this debt. Projections indicate that further costs estimated at Euro 7,140,000 (USD 9,600,000) will need to be paid to the completion of the SAGEM Wireless related restructuring plan. If SAGEM Wireless is unable to meet its commitments to reimburse these costs under the settlement agreement Myriad will be left with this liability until such time as the costs can be recovered from SAGEM Wireless or from other signatories to the settlement agreement. However, based on legal advice provided to Myriad France SAS and the assessment of the contractual agreements management believe that Myriad would be able to recover the costs from the SAGEM Wireless shareholders, who were signatories to the settlement agreement, and who should be held liable for any breach of that agreement by their affiliated company. Myriad France SAS, SAGEM Wireless, SAFRAN and Sofinnova Partners are currently contesting a writ from the Myriad France SAS Works Council and Employees for additional compensation in connection with the restructuring plan. Myriad assess a negative outcome of the claims as remote. Management are not aware of any other significant commitments or contingent liabilities which have not been disclosed in these financial statements.

24. Financial instruments The following table shows the carrying amount of all financial instruments by category. USD’000

Financial assets Assets available for sale: Long-term investments and other financial assets Loans and receivables: Long-term investments and other financial assets Net trade receivables Other receivables Accrued income Short-term investments and marketable securities Cash and cash equivalents Financial liabilities: Other financial liabilities: Loans and borrowings Trade payables Other payables Restructuring costs Employee compensation related accruals Accrued mediation fees Accrued expenses

Note

2010

2009

12

457

416

12

1,094 9,607 410 4,507 – 33,737

1,043 8,704 880 7,083 4,718 33,235

49,812

56,079

3,253 2,181 2,615 2,396 7,542 7,245 17,141

8,655 3,234 4,088 – 9,501 – 8,708

42,373

34,186

14 14 14 15 16

18 21 21 21 21 21 21


Myriad Group AG Annual Report 2010

59

25. Financial risk management Financial risk factors

Overview

The Group has no financial instruments carried at fair value. The Board of Directors considers that the carrying amount of financial instruments approximates their fair value. Due to the absence of an active market and as fair value cannot be reliably measured by other means, assets available for sale are measured at cost.

The Board of Directors bears 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 risk management in an efficient and effective way. Management monitors risk management and reports to the Board on a regular basis. The Group’s activities expose it to a variety of financial risks: market risk (including currency risk and interest rate risk), credit risk and liquidity risk. The following sections provide an overview of each of these risks.

(a) Market risk

(i) Foreign exchange risk Revenue in the parent company generally arises in US Dollars and Euros whereas the related costs are incurred in Swiss Francs. Revenue in the Chinese subsidiary generally arises in US Dollars and Chinese Yuan whereas their related costs are incurred in Chinese Yuan. Revenue in the French subsidiary generally arises in US Dollars and Euros whereas the related costs are incurred in Euros. Operating costs in other Group companies are generally incurred in local currencies. Currently the Group does not 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.

Business Review

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 liabilities.

At 31 December 2010, if other currencies (predominantly Euros and Swiss Francs) had weakened/strengthened by 10% against the USD with all other variables held constant, the loss before income tax would have been USD 951,000 (2009: USD 1,704,000) higher/lower. This sensitivity analysis includes only outstanding non-USD denominated financial instruments.

(b) 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.

Corporate Governance

(ii) Interest rate risk Interest rate risk arises from movements in interest rates, which could have adverse effects on the Group’s net income or financial position. The Group has no significant interest rate exposure. The Group places its cash and cash equivalents primarily in short-term interest-bearing accounts. Information on the Group’s interest-bearing liabilities is set out in note 18. Revenue and operating cash flows are substantially independent of changes in market interest rates.

Current bank deposits, cash equivalents and short-term investments are placed with banks and financial institutions with a rating of at least ‘A-’ as measured by Standard & Poor’s.

The Group establishes an allowance for doubtful debts that represents its best estimate of incurred losses in respect of trade 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.

(c) 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.

Financial Report 2010

Concentration of credit risk is primarily associated with trade receivables. The Group has numerous customers located in a variety of geographical regions. The Group’s policy is to only recognise revenue on the achievement of payment milestones and based on customer royalty reports, all invoices are payable within contractual terms based on the invoice date.


60

Myriad Group AG Annual Report 2010

Notes to the consolidated financial statements continued

The following tables show the maturity of the financial liabilities: Maturity analysis of financial liabilities as at 31 December 2010: Carrying amount

Future finance charges

Contractual cash flow amount

Within 1 year

1-2 years

2-5 years

5+ years

Loans and borrowings Trade payables Other payables Restructuring costs Employee compensation related accruals Accrued mediation fees Accrued expenses

3,253 2,181 2,615 2,396

48 – – –

3,301 2,181 2,615 2,396

981 2,181 1,933 2,396

171 – – –

2,149 – – –

– – 682 –

7,542 7,245 17,141

– – –

7,542 7,245 17,141

7,542 7,245 17,141

– – –

– – –

– – –

Total financial liabilities

42,373

48

42,421

39,419

171

2,149

682

USD’000

Maturity analysis of financial liabilities as at 31 December 2009: Carrying amount

Future finance charges

Contractual cash flow amount

Within 1 year

1-2 years

2-5 years

5+ years

Loans and borrowings Trade payables Other payables Employee compensation related accruals Accrued expenses

8,655 3,234 4,088

1,189 – –

9,844 3,234 4,088

6,052 3,234 3,728

1,327 – –

2,465 – –

– – 360

9,501 8,708

– –

9,501 8,708

9,501 8,708

– –

– –

– –

Total financial liabilities

34,186

1,189

35,375

31,223

1,327

2,465

360

USD’000

Capital Management The Board’s policy is to maintain a strong capital base so as to maintain investor, other stakeholder and market confidence and to sustain future development of the business. The Group monitors capital on the basis of the debt:equity ratio. This ratio is calculated as net debt divided by total capital. Net debt is calculated as total loans and borrowings (including non-current and current loans and borrowings) less cash and cash equivalents and short-term investments and marketable securities. Total capital is calculated as equity (as shown in the consolidated balance sheet) plus net debt . The target of the Group is to maintain a strong capital base and maintain the debt:equity ratio below 50%.

26. Business combinations Purple Labs SA In 2009 Myriad acquired all outstanding shares in Purple Labs SA, France (subsequently renamed Myriad France SAS) in an all-share transaction. The parties agreed that the shareholders of Purple Labs SA would receive 19,658,132 shares with a nominal value of CHF 0.10 each in the Company as consideration. It was further agreed that Purple Labs SA shareholders would receive 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 was 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 29 March 2010.


Myriad Group AG Annual Report 2010

61

Overview

Purple Labs SA was included in the consolidation of the Group as from 1 April 2009. The acquisition had the following effect on the Group’s assets and liabilities: Effect of the acquisition on 1 April 2009 USD’000

Net assets acquired on 1 April 2009

550 22,506 4,314 19,857 475 22,183 (7,051) (2,715) (25,285) (386)

Fair value adjustments

30,054

(6,557) (11,916) 22,532

23,497

Fair value

550 52,560 4,314 19,857 475 22,183 (7,051) (2,715) (25,285) (386) (6,557) (11,916) 46,029

Goodwill

43,765

Total purchase price

89,794

Settled by: – payment with shares       – paid transaction costs

88,576 1,218

Total purchase price

89,794

Paid in cash in 2009 Less cash acquired

(1,218) 22,183 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 43,765,000 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.

Corporate Governance

Cash inflow from acquisition in 2009, net

Business Review

Furniture and equipment Intangible assets Trade receivables Other receivables Other financial assets Cash and cash equivalents Loans and borrowings Trade payables Other payables Pension liabilities Deferred tax liabilities Deferred revenue

Book value (pre-acquisition)

On a pro forma basis, had Purple Labs SA been acquired as at 1 January 2009, the revenue for the year ended 31 December 2009 would have been USD 125.8 million and the net loss USD 51.4 million.

27. Related party transactions 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 20% of the share capital, as well as entities under these parties’ control. There were no transactions with related parties during the year ended 31 December 2010. Sofinnova Partners, who held in excess of 20% of the share capital during 2010, are signatories to the SAGEM Wireless settlement agreement referred to in note 23.

Financial Report 2010

This acquisition affected revenues and net loss during the year ended 31 December 2009, by USD 60.8 million and USD (11.6) million respectively.


62

Myriad Group AG Annual Report 2010

Notes to the consolidated financial statements continued

Transactions with related parties during the year ended 31 December 2009 were as follows: (i) Expenses totalling USD 31,850 were recognised in respect of consulting services provided to the Group by a member of the Board of Directors. The aforementioned Director stepped down at the ordinary general meeting held on 19 May 2009. (ii) Expenses totalling USD 18,663 were recognised in respect of consulting services provided to the Group by a member of the Board of Directors. The aforementioned Director stepped down at the ordinary general meeting held on 19 May 2009. Key management compensation is disclosed in Note 6.

28. Events after the reporting period There are no events occurring subsequent to the balance sheet date that require disclosure. The Board of Directors authorised these consolidated financial statements on 29 March 2011 for issue on 30 March 2011. They are subject to approval at the annual meeting of shareholders to be held on 19 May 2011.

29. Principal subsidiaries

Name

Myriad Mobile Software Inc (formerly Esmertec Inc) Myriad (China) Co. Ltd Myriad Technology AG Myriad Group Korea Co. Ltd Myriad France SAS (formerly Purple Labs SA) Myriad Group (UK) Ltd Purple Labs Trading Ltd Myriad Japan Inc

Share capital (million)

Country of incorporation

USD 0.1 USA CNY 2.0 China CHF 1.0 Switzerland KRW 50.8 South Korea EUR 0.5 France GBP 0.01 UK HKD 0.02 Hong Kong JPY 5.0 Japan

Purple Labs Inc

USD 0.03 USA

Myriad Group Australia Pty Ltd

AUD 0.04 Australia

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. Myriad Group Australia Pty Ltd.’s share capital is AUD 100.

Function

Proportion of voting right held by the Group

Sales and Support Engineering services, Sales and Support

100% 100%

Administrative Engineering services, Sales and Support

100% 100%

Engineering services, Sales and Support

100%

Administrative Engineering services, Sales and Support Engineering services, Sales and Support Engineering services, Sales and Support Engineering services, Sales and Support

100% 100% 100% 100% 100%


Myriad Group AG Annual Report 2010

63

Report of the statutory auditor to the general meeting of Myriad Group AG, Dübendorf As statutory auditor, we have audited the consolidated financial statements of Myriad Group AG, which comprise the income statement, statement of comprehensive income, balance sheet, statement of changes in equity, statement of cash flows and notes (pages 29 to 62), for the year ended 31 December 2010.

Overview

Report of the statutory auditor on the consolidated financial statements

Board of Directors’ Responsibility The Board of Directors is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the 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.

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 the 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.

Opinion In our opinion, the consolidated financial statements for the year ended 31 December 2010 give a true and fair view of the financial position, the results of operations and the cash flows in accordance with the 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.

Corporate Governance

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.

Business Review

Auditor’s Responsibility

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 consolidated financial statements according to the instructions of the Board of Directors.

PricewaterhouseCoopers AG

Martin Kennard Audit expert Auditor in charge Zurich, 29 March 2011

Roger Roth Audit expert

Financial Report 2010

We recommend that the consolidated financial statements submitted to you be approved.


64

Myriad Group AG Annual Report 2010

Statutory financial statements Myriad Group AG, Dübendorf Income statement For the year ended 31 December 2010

2009

Licence revenue Service revenue Revenue with group companies

CHF

18,537,958 7,368,546 695,686

12,134,703 5,740,956 3,284,993

Total revenue

26,602,190

21,160,652

Cost of licence revenue Cost of service revenue

(7,938,003) (3,639,417)

(4,341,198) (7,542,449)

Total cost of revenue

(11,577,420)

(11,883,647)

Gross profit before amortisation

15,024,770

Amortisation of intangible assets

(4,341,191)

9,277,005 (12,114,960) (2,837,955)

Gross profit/(loss)

10,683,579

Research and development Sales and marketing General and administrative Doubtful debt (expense)/release Restructuring & integration Other (expense)/income

(7,996,692) (3,802,415) (3,932,453) (2,275,642) (7,208,455) (10,429,345) (85,380) 64,060 (802,895) – (84,969) 160,817

Loss from operations before extraordinary items, interest and taxes

(9,427,265)

Finance income Finance costs Profit on sale of non-current assets Value adjustment on investments Decrease/(increase) of value adjustment on loans

193,021 1,195,310 (1,350,855) (946,174) – 20,237,095 – (2,402,671) – (28,256,400)

Ordinary operating loss Release of provisions Extraordinary loss from change in accounting policy Loss before taxes Income and withholding taxes Net loss

(19,120,480)

(10,585,099) (29,293,320) – –

9,400,000 (17,609,932)

(10,585,099) (37,503,252) (702,657)

(1,325,135)

(11,287,756) (38,828,387)


Myriad Group AG Annual Report 2010

65

At 31 December CHF

Current assets Trade receivables due from: – third parties – group companies Other receivables due from: – third parties – group companies Prepaid expenses and accrued income Cash and cash equivalents

 

3

4,213,032 (1,167,208) 30,301,790 (25,808,924) 903,224 (903,224) 261,684 2 23,059 2,385,858 –

3,776,185 (1,167,208) 29,082,301 (29,082,301) 1,005,843 (1,005,843) 359,639 2 199,755 5,538,297 1,181,297

10,209,293

9,887,967  

1,719,137 5,477,819

1,468,975 829,664

1,700,003 – 7,856,318 5,609,584

1,748,104 8,654 2,317,077 20,709,698

22,362,861

27,082,172

32,572,154

36,970,139

Corporate Governance

TOTAL ASSETS

2009

2010

Business Review

ASSETS Non-current assets Financial assets – Investments – Value adjustment on investments – Loans to group companies – Value adjustment on loans to group companies – Loans to third parties – Value adjustment on loans to third parties – Security deposits and other financial assets Own shares Furniture and equipment Intangible assets Foundation costs

Note

Overview

Balance sheet

Financial Report 2010


66

Myriad Group AG Annual Report 2010

Statutory financial statements continued

At 31 December CHF

EQUITY AND LIABILITIES Shareholders’ equity Share capital Legal reserves (share premium) Other reserves (share premium) Reserve for own shares Accumulated losses – Accumulated losses brought forward – Net loss for the year Non-current liabilities Interest-bearing loans and borrowings due to: – third parties – group companies Other non-current liabilities due to: – group companies Deferred revenue Current liabilities Interest-bearing loans and borrowings due to: – third parties Trade payables due to: – third parties – group companies Other current liabilities due to: – third parties – group companies Advance customer payments Accrued expenses Deferred revenue

Note

5

2010

2009

 

 

4,856,061 2,209,607 9,619,612 2

4,419,213 2,209,607 48,448,000 2

– – (11,287,756) (38,828,387)

4 4

4

5,397,526

16,248,435

– 5,476,674

42,443 6,806,000

– –

599,654 80,376

5,476,674

7,528,473

 

 

1,246,650

302,456 –

232,729 23,827

115,315 1,751,280 1,823,258 17,058,007 647,638

111,674 1,040,917 4,988,432 5,023,610 525,392

21,697,954

13,193,231

Total liabilities

27,174,628

20,721,704

TOTAL EQUITY AND LIABILITIES

32,572,154

36,970,139


Myriad Group AG Annual Report 2010

67

Notes to the statutory financial statements Myriad Group AG (‘the Company’) is a company incorporated in Dübendorf, Switzerland whose shares are quoted on the SIX Swiss Exchange.

Overview

1. General information

The accompanying financial statements present information relating to the Company only and are presented in Swiss Francs (CHF).

2. Significant accounting policies The accompanying financial statements have been prepared in accordance with the requirements of Swiss law and the Company’s Articles of Incorporation. The financial statements have been prepared on a historical cost basis and are presented on the basis that the Company will continue as a going concern. The significant accounting policies adopted have been consistently applied to all the years presented.

As at 31 December 2010 and 31 December 2009, Myriad Group AG held investments in the following companies:

Name

Myriad Mobile Software Inc (formerly Esmertec Inc) Myriad (China) Co. Ltd Myriad Technology AG Myriad Group Korea Co. Ltd

Share capital (million)

Country of incorporation

USD 0.1 USA CNY 2.0 China CHF 1.0 Switzerland KRW 50.8 South Korea EUR 0.5 France

Myriad Japan Inc

JPY 5.0 Japan

Myriad Group Australia Pty. Ltd

AUD 0.01 Australia

Function

Sales and Support

100%

Engineering services, Sales and Support Administrative Engineering services, Sales and Support Engineering services, Sales and Support Engineering services, Sales and Support Engineering services, Sales and Support

100% 100% 100% 100% 100% 100%

1. Myriad Group Australia Pty Ltd’s share capital is AUD 100.

4. Interest-bearing loans and borrowings CHF

2009

– – 5,476,674

1,239,918 49,175 6,806,000

5,476,674

8,095,093

The remaining value of the convertible bonds was redeemed during 2010.

5. Share capital As recorded in the register of commerce on 31 December 2010, the share capital consisted of 48,560,611 (2009: 44,177,506) fully paid shares with a nominal value of CHF 0.10 each. Taking into consideration shares issued but not yet registered in connection with the exercise of stock options the share capital at 31 December 2009 totalled 44,192,137 fully paid shares with a nominal value of CHF 0.10 each.

Financial Report 2010

Due to third parties – convertible bond – loans Due to group companies

2010

Corporate Governance

Myriad France SAS

Proportion of voting rights held

Business Review

3. Significant investments


68

Myriad Group AG Annual Report 2010

Notes to the statutory financial statements continued

The following table summarises the share capital: CHF

2010

2009

Reconciliation of share capital – Share capital as per registry of commerce – Paid in capital not yet registered (executed stock options and conversion rights)

4,856,061 –

4,417,750 1,463

Total share capital

4,856,061

4,419,213

Unissued authorised and conditional share capital – Unissued authorised share capital – Unissued conditional share capital

– 447,559

437,374 447,559

Total unissued authorised and conditional share capital

447,559

884,933

Shares issued through exercise of employee stock options During 2010, no employee stock options were exercised. During 2009, 14,631 employee stock options were exercised resulting in net proceeds to the Company of CHF 50,764. Any capital increase is recorded in the register of commerce in the year following issuance, but is recorded in the accounts in the year in which the employee stock options were exercised.

Shares issued in connection with business combinations In March 2010 the Company increased its share capital out of the authorised share capital by 4,368,474 shares in connection with the acquisition of Purple Labs SA (subsequently renamed Myriad France SAS), for the settlement of the remaining part of the earn-out portion.

Authorised share capital At 31 December 2010, the authorised share capital is nil.

Conditional share capital Of the conditional capital of CHF 447,559.20 (4,475,592 shares of CHF 0.10 each) as at 31 December 2010, CHF 377,059.00 is reserved for the exercise of employee stock option rights which may be granted to members of the Board of Directors (“Board”), employees of the Group as well as members of an Advisory Board (not established) under Group 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 the conditional capital was reserved for the exercise of conversion rights which were granted to investors in Myriad’s convertible bonds. The remaining value of the convertible bonds was redeemed in 2010.

Treasury shares In 2010 no transactions with treasury shares took place. At 31 December 2010 the balance contains 20 (2009: 20) shares with a nominal value of CHF 0.10 each.

Significant shareholders At 31 December the significant (>3%) shareholders of the Company were as follows: Percentage of shares held as of 31 December Name of shareholder

Sofinnova Partners SA, Paris, France SAGEM Telecommunications SA, Paris, France Patinex AG, Wilen, Switzerland UBS Fund Management, Basel, Switzerland Partners Group Holding AG, Baar, Switzerland Simon Wilkinson (CEO)1 Earlybird Verwaltungs GmbH, Munich, Germany 1. Participation includes shares (2.70%) and employee options (1.03%).

2010

2009

9.84% 7.00% 6.65% 5.56% 5.26% 3.73% –

27.70% 6.50% – – 14.70% – 11.50%


Myriad Group AG Annual Report 2010

69

CHF

Fire insurance value of furniture and equipment

2010

2009

108,000

570,000

Overview

6. Other disclosures related to the balance sheet and commitments

7. Disclosures related to the income statement CHF

Depreciation of furniture and equipment Personnel expenses

2010

2009

80,429 7,155,551

164,435 9,655,713

8. Guarantees and pledges in favour of third parties

9. Compensation Compensation paid to the members of the Board of Directors in 2010:

CHF

Dr. Rolf P. Jetzer Loek van den Boog

 

Total

 

Roland Manger Michel Paulin

Number of options granted

Fair value of stock options granted 1

Total compensation 2010

75,000

75,000

62,500 30,000

20,000 –

44,816 –

107,316 30,000

40,000 30,000 30,000 30,000 –

10,000 – – 10,000 –

24,747 – – 24,747 –

64,747 30,000 30,000 54,747 –

297,500

40,000

94,310

391,810

Compensation paid to the members of the key management in 2010: CHF

Key management of whom Simon Wilkinson, CE0 (highest individual compensation)

Annual salary

Termination payment

Bonus

Expense allowance

Options (at fair value)

Total 2010

2,421,487

1,597,229

50,908

393,253

4,462,877

399,865

630,187

1,030,052

Financial Report 2010

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 exercise price of the granted options is CHF 4.55-5.11. Each option entitles the holder to subscribe for one register share in Myriad Group AG. 1/3 of the options vest 12 months after the grant date and 1/36 vests on each of the 24 consecutive months. 2. Dr Rolf P. Jetzer passed away unexpectedly on 19 September 2010; he ceased to be Chairman and a Board Member on this date. 3. Loek van den Boog was elected Chairman of the Board on 28 September 2010. During 2010 he acted as Head of the AC up to 31 December 2010. Effective 1 January 2011 he became Head of the CNC and relinquished the role of Head of the AC to Michel Paulin but remained a member of the AC. 4. Roland Manger resigned as a Board Member on 18 November 2010. 5. M  ichel Paulin acted as Head of the CNC during 2010. Effective 1 January 2011 he became Head of the AC and relinquished his role as Head of the CNC to Loek van den Boog but remained a member of the CNC. 6. Jean Schmitt resigned as a Board Member on 21 December 2010. 7. Simon Wilkinson’s remuneration is disclosed under key management compensation note below. AC = Audit Committee CNC = Compensation and Nomination Committee

Corporate Governance

Hans-Ulrich Müller Jean Schmitt Michel Bon Simon Wilkinson

Board Member, Member CNC Chairman of the Board, Member AC, Head of CNC 3 Board Member 4 Board Member, Member CNC, Head of AC 5 Vice Chairman, Member CNC Board Member 6 Board Member, Member AC Board Member, CEO 7 2

Cash compensation

Business Review

An amount of CHF nil (2009: CHF 622,665) is pledged at Credit Suisse AG as at 31 December 2010 in order to cover two bid bonds.


70

Myriad Group AG Annual Report 2010

Notes to the statutory financial statements continued

Indirect benefits paid in 2010: CHF

Key management of whom Simon Wilkinson, CEO (highest individual compensation)

Social insurance

Pensions

Source tax

Total 2010

354,746

2,581

357,327

130,677

130,677

Cash compensation

Number of options granted

Fair value of stock options granted 1

Total compensation 2009

66,667 38,333 25,000 25,000 35,833 30,000 38,333

90,000 30,000 30,000 30,000 10,000 10,000 10,000

180,000 60,000 60,000 60,000 20,000 20,000 20,000

246,667 98,333 85,000 85,000 55,833 50,000 58,333

227,853

227,853

11,250 –

– –

– –

11,250 –

498,269

210,000

420,000

918,269

Compensation paid to the members of the Board of Directors in 2009:

CHF

Dr. Rolf P. Jetzer Loek van den Boog Roland Manger Michel Paulin Hans-Ulrich Müller Jean Schmitt Michel Bon Hans Peter Baumgartner Jean-Claude Martinez Simon Wilkinson Total

 

Chairman of the Board, Member CNC 2 Board Member, Head of AC, Member CNC 3 Board Member3 Board Member, Head of CNC, Member AC4 Vice Chairman, Member CNC Board Member Board Member, Member AC Chairman of the Board, Member AC, Member CNC (resigned)5 Board Member, Member AC (resigned)5 Board Member, CEO6  

1. T  he 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. The exercise price of the granted options is CHF 4.90-5.15. 2. Dr. Rolf P. Jetzer was elected as a Board Member and Chairman of the Board on 19 May 2009. 3. Loek van den Boog and Roland Manger joined the Board on 18 March 2009. 4. Michel Paulin joined the Board on 19 May 2009. 5. Hans Peter Baumgartner and Jean-Claude Martinez resigned as Board Members on 19 May 2009. 6. Simon Wilkinson joined the Board on 18 March 2009; his remuneration is disclosed under key management compensation note below. AC = Audit Committee CNC = Compensation and Nomination Committee

Compensation paid to the members of the key management in 2009: CHF

Annual salary

Termination payment

Bonus

Expense allowance

Options (at fair value)

Total 2009

2,897,426

540,000

1,664,698

98,352

1,440,000

6,640,476

317,966

432,434

750,400

252,209

320,000

201,602

50,352

824,163

Social insurance

Pensions

Source tax

Total 2009

543,508   110,684

110,709   –

88,496

742,713

110,684

55,263

27,875

75,437

158,575

Key management of whom Simon Wilkinson, CE0 Thomas Hornung, former CEO* (highest individual compensation) * Thomas Hornung resigned on 18 March 2009.

Indirect benefits paid in 2009: CHF

Key management of whom Simon Wilkinson, CEO Thomas Hornung, former CEO* (highest individual compensation) * Thomas Hornung resigned on 18 March 2009.


Myriad Group AG Annual Report 2010

71

Expenses totalling CHF 20,216 were recognised in respect of consulting services provided to the Group by a member of the Board of Directors. The aforementioned Director stepped down at the ordinary general meeting held on 19 May 2009.

Overview

Expenses totalling CHF 34,500 were recognised in respect of consulting services provided to the Group by a member of the Board of Directors. The aforementioned Director stepped down at the ordinary general meeting held on 19 May 2009.

Shareholdings of members of the Board of Directors, key management or persons related to them as at 31 December

2009

2010

Dr. Rolf P Jetzer1 Loek van den Boog

Number of options

Number of shares

Number of options

90,000

77,062 – – 50,001 – – 1,311,757 – 393,524 – – – – – – –

50,000 – 40,000 26,000 – 60,000 500,000 500,000 131,168 350,000 220,000 50,000 50,000 330,632 90,000 70,000

63,050 – – 42,415 1 1 1,073,255 – 321,974 – – – – – – –

30,000 30,000 30,000 26,000 26,000 50,000 – 250,000 107,320 250,000 220,000 – – 188,699 – –

Related party transactions 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 20% of the share capital, as well as entities under these parties’ control.

10. Risk management Enterprise risk management as a fully integrated risk management process was applied systematically in 2010. 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).

Financial Report 2010

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, there were no further transactions with related parties during the years ended 31 December 2009 and 31 December 2010. Sofinnova Partners, who held in excess of 20% of the share capital during 2010, are signatories to the SAGEM Wireless settlement agreement referred to in note 23 to the consolidated financial statements.

Corporate Governance

1. Dr Rolf P. Jetzer passed away unexpectedly on 19 September 2010; he ceased to be Chairman and a Board Member on this date. 2. Roland Manger resigned as a Board Member on 18 November 2010. 3. Jean Schmitt resigned as a Board Member on 21 December 2010.

Business Review

Roland Manger2 Michel Paulin Hans-Ulrich Müller Jean Schmitt3 Michel Bon Simon Wilkinson James Bodha Steve Langkamp Benoit Schillings Malcolm Dawe Gary Bunney Mike Brady Gordon Tsang James Robins Liz Hitchen

Board Member, Member CNC Chairman of the Board, Member AC, Head of CNC Board Member Board Member, Head of AC, Member CNC Vice Chairman, Member CNC Board Member Board Member, Member AC Board Member, Chief Executive Officer Chief Financial Officer Chief Commercial Officer Chief Technology Officer Chief Product Officer SVP & GM Device Solutions Division SVP & GM Mobile Services Division SVP Sales & GM Asia SVP Marketing VP Human Resources

Number of shares


72

Myriad Group AG Annual Report 2010

Report of the statutory auditor to the general meeting of Myriad Group AG, Dübendorf Report of the statutory auditor on the financial statements As statutory auditor, we have audited the financial statements of Myriad Group AG, which comprise the income statement, balance sheet and notes (pages 64 to 71), for the year ended 31 December 2010.

Board of Directors’ Responsibility The 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 Responsibility Our 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 31 December 2010 comply with Swiss law and the company’s articles of incorporation.

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 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 recommend that the financial statements submitted to you be approved. PricewaterhouseCoopers AG

Martin Kennard Audit expert Auditor in charge Zurich, 29 March 2011

Roger Roth Audit expert


Myriad Group AG Annual Report 2010

73

Information for investors Share price data Symbol: MYRN Listing: SIX Swiss Exchange Nominal value: CHF 0.10 ISIN: CH0019624805 Swiss Security Number (Valor): 1,962,480 Number of shares, at year end Year high

2010

2009

2008

48,560,611

44,192,137

21,308,584

CHF 5.35

CHF 6.40

CHF 11.80

Year low

CHF 2.95

CHF 3.50

CHF 4.36

Year end

CHF 5.00

CHF 4.85

CHF 6.40

Average daily trading volume (shares) Loss per share (IFRS)

92,804 USD (0.69)

Ordinary dividend per share Market capitalisation at year end

28,806 USD (1.47)

26,847 USD (0.37)

CHF 242.8 million

CHF 214.3 million

CHF 156.9 million

Financial calendar May 19, 2011: Annual General Meeting September 7, 2011: Half Year Results 2011 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 investor_relations@myriadgroup.com


Myriad Group AG Annual Report 2010

Annual Report 2010 Myriad Group AG

Myriad Group AG Lagerstrasse 14,

Myriad Group AG is a global leader in mobile technology and has shipped over 3.8 billion software applications in more than 2.2 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.

8600 D端bendorf, SWITZERLAND

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 35 mobile operators worldwide.

t: +41 (0) 44 823 89 00 f: +41 (0) 44 823 89 99 e: info@myriadgroup.com www.myriadgroup.com

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

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 息 Myriad Group AG 2011. CD15505 02/11

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Myriad Group AG Annual Report 2010