17872	 19/05/2010	 Proof	8
Vero Software Plc
Annual Report and Accounts
December 2009 17872	 19/05/2010	 Proof	8
V e r o S o f t w a r e P l c
Contents
Financial and operating highlights 1
Our products 2
Chairman’s statement 3
Our software at work 4
Chief executive’s review 6
Board of directors 8
Directors and advisers 10
Directors’ report  11
Independent Auditors’ Report to the  
Shareholders of Vero Software Plc 17
Consolidated statement of financial performance 18
Consolidated statement of 
comprehensive income 18
Consolidated statement of financial position 19
Consolidated statement of changes 
in equity 20
Consolidated cash flow statement 21
Notes to the financial statements 22
Independent Auditors’ Report to the  
Shareholders of Vero Software Plc 49
Company balance sheet 50
Notes to the financial statements  51
Vero Software Plc comprises ten offices in England, Italy, the United States, 
Canada, Japan, China, and France. Since 1988 Vero have been providing 
innovative and specialised solutions for the engineering industry through a 
network of over seventy partners in more than forty countries. 
The Company creates, owns and distributes software for aiding the design and 
manufacturing process in specific sectors of industry. The sectors include the 
design and manufacture of plastic injection moulds, sheet metal stamping dies, 
multi axis machining, Wire EDM and laser cutting.
The Company firmly believes that step gains in productivity can be made by 
building as much knowledge of design and machining processes within its 
software as possible. This philosophy of productivity through specialisation has 
led to new applications in the design of mould tools and progressive dies. 
Our software is used by the world’s most advanced toolmakers, as well as 
leading aerospace, automotive, packaging and medical companies to give a 
clear competitive advantage in today’s tough business environment. Continual 
software development is core to the philosophy at Vero; with extensive 
research and development ensuring Vero remains at the cutting edge of 
technology.
Vero works in partnership with its customers – for the long term. Understanding 
the demands of their business and providing practical and innovative solutions. 
We listen to our customers’ requirements and build answers into the software 
to meet their expectations.
The Company
  A n n u a l R e p o r t a n d A c c o u n t s 2 0 0 9
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l	 Robust	 performance	 in	 particularly	 challenging	 trading	 conditions
l	 EBITDA	 (earnings	 before	 interest,	 tax,	 depreciation	 and	 amortisation)	 increased	 by	 10%	 to	
£2	 million	 (2008:	 £1.8m)
l	 Revenue	 reduced	 by	 8%	 to	 £12.8	 million	 (2008:	 £13.9m)	 despite	 a	 full	 year	 of	 falling	 demand	
from	 the	 manufacturing	 sector
l	 Growth	 in	 maintenance	 revenues	 of	 18%,	 showing	 the	 continuing	 strength	 of	 recurring	 revenues
l	 Pre-tax	 profit	 of	 £0.6	 million	 (2008:	 £0.9m)
l	 Fully	 diluted	 earnings	 per	 share	 of	 1.94p	 (2008:	 2.27p)
l	 Completion	 of	 £2	 million	 re-financing	 achieved	 in	 December	 replacing	 the	 troublesome	 Fortis	
loans	 and	 restoring	 working	 capital	 headroom
Queen’s	 Award
The	 Company	 recently	 announced	 that	 they	 have	 been	 awarded	 the	 much	 coveted	
Queen’s	 Award	 for	 Enterprise	 2010.	 The	 Queen’s	 Awards	 are	 the	 UK’s	 most	 prestigious	
business	 awards	 and	 further	 endorse	 Vero	 as	 a	 leading	 UK	 company	 with	 a	 global	 reputation.	 The	
awards	 are	 made	 each	 year	 by	 The	 Queen,	 on	 the	 advice	 of	 the	 Prime	 Minister,	 who	 is	 assisted	
by	 an	 independent	 Advisory	 Committee	 that	 includes	 representatives	 of	 Government,	 industry	 and	
commerce,	 and	 the	 trade	 unions.	 The	 award	 will	 be	 officially	 presented	 by	 the	 Lord-Lieutenant	 of	 the	
County,	 The	 Queen’s	 local	 representative.
Vero	 Software	 Plc	 has	 been	 rewarded	 for	 its	 continuous	 achievement	 in	 international	 trade	 over	 the	
last	 6	 years.	
Our	 success	 owes	 a	 great	 deal	 to	 the	 dedication	 of	 our	 overseas	 operations.	 Each	 competence	
centre	 is	 fully	 trained	 with	 our	 product	 suite	 and	 has	 ‘real-life’	 industrial	 knowledge.	 This	 is	 vitally	
important	 when	 trying	 to	 promote	 new	 technologies	 into	 a	 well	 established	 CAD/CAM	 market.	
We	 are	 extremely	 proud	 and	 honoured	 to	 have	 won	 this	 award	 which	 is	 full	 recognition	 of	 the	
valuable	 work	 of	 our	 staff	 and	 extensive	 reseller	 network.	 We	 invest	 heavily	 in	 original	 research	 to	
develop	 highly	 productive	 software	 that	 is	 already	 well	 appreciated	 by	 our	 customers	 and	 this	 further	
acknowledgement	 is	 a	 brilliant	 reward	 for	 our	 efforts.
Financial	 and	 operating	 highlights V e r o S o f t w a r e P l c
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Our	 products
Service	 and	
Support
VISI	 is	 acknowledged	 as	 one	 of	 the	
world’s	 leading	 PC	 based	 CAD/
CAM/CAE	 solutions	 for	 the	 mould	
&	 die	 industries.	 It	 offers	 a	 unique	
combination	 of	 applications,	 fully	
integrated	 wireframe,	 surface	 and	
solid	 modelling,	 comprehensive	 2D,	
3D	 and	 5	 axis	 machining	 strategies	
with	 dedicated	 high	 speed	 routines.	
Industry	 specific	 applications	 for	
plastic	 injection	 tool	 design,	 including	
material	 flow	 analysis	 and	 progressive	
die	 design	 with	 step-by-step	
unfolding,	 provide	 the	 toolmaker	 with	
unsurpassed	 levels	 of	 productivity.	
The	 PEPS	 suite	 of	 software	 is	 a	
Computer	 Aided	 Manufacturing	
(CAM)	 system	 that	 allows	 machines	
to	 produce	 components	 economically	
and	 can	 extend	 the	 range	 of	 work	
that	 a	 user	 is	 able	 to	 manufacture.	
The	 result	 may	 be	 a	 new	 lease	 of	
life	 for	 older	 machines,	 making	 them	
more	 productive	 without	 involving	 the	
owner	 in	 expensive	 replacement	 or	
maximising	 the	 output	 from	 new.	
The	 system’s	 key	 benefit	 is	 its	 unique	
approach,	 offering	 powerful	 features	
with	 extreme	 simplicity	 of	 use.	 Using	
an	 industry	 standard	 system	 in	 this	
way	 greatly	 reduces	 training	 times	 and	
ensures	 you	 produce	 NC	 programs	
quickly	 and	 effectively.
The	 SMIRT	 suite	 of	 products	 is	
powerful	 viewing	 and	 manufacturing	
software	 designed	 explicitly	 for	 the	 Die	
Build	 stamping	 industry.	 The	 SMIRT	
applications	 have	 been	 developed	
specifically	 for	 the	 “Shop	 Floor”	
environment	 and	 allow	 companies	 to	
define	 its	 best	 practice	 construction	
and	 manufacturing	 processes.	 These	
products	 provide	 designers,	 die	
planners	 and	 machinists	 with	 powerful	
easy	 to	 use	 ‘Viewing’	 and	 ‘CAM’	 tools	
that	 enhance	 productivity	 and	 increase	
their	 bottom	 line.
Everything	 we	 do	 is	 driven	 by	 a	
desire	 to	 make	 our	 customers	 more	
productive	 through	 the	 development	
of	 intuitive	 and	 specific	 software.
Vero	 has	 a	 worldwide	 network	 of	
highly	 skilled	 engineers	 and	 developers	
who	 have	 been	 with	 Vero	 throughout	
their	 career.	 This	 experience	 provides	
a	 solid	 foundation	 for	 growth	 and	
allows	 Vero	 to	 establish	 valuable	
relationships	 with	 customers	 and	
external	 partners	 alike.	
Vero	 engineers	 understand	 the	 market	
needs	 through	 practical	 experience	
and	 are	 able	 to	 recommend	 the	 most	
appropriate	 combinations	 of	 software,	
training	 and	 services	 that	 suits	 the	
customers’	 needs.	 With	 thousands	 of	
licenses	 in	 use	 worldwide,	 and	 more	
than	 7,500	 users	 registered	 for	 its	
annual	 maintenance	 services,	 Vero	
Software	 is	 one	 of	 the	 world’s	 leading	
CAD/CAM	 developers. A n n u a l R e p o r t a n d A c c o u n t s 2 0 0 9
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I	 am	 pleased	 to	 report	 a	 stable	 set	
of	 results	 for	 2009	 despite	 trading	
conditions	 that	 have	 been	 more	 difficult	
than	 any	 that	 we	 have	 encountered	
since	 the	 inception	 of	 the	 Company.
Results
Turnover	 reduced	 by	 8%	 to	 £12.8m	
(2008:	 £13.9m),	 although	 the	 regional	
breakdown	 of	 results	 varied,	 with	 North	
America	 faring	 better	 than	 both	 Europe	
and	 Asia.	 The	 relatively	 small	 fall	 in	
turnover	 considering	 the	 harsh	 market	
background	 is	 evidence	 of	 the	 strength	
of	 Vero	 Software’s	 recurring	 revenues.
EBITDA	 (earnings	 before	 interest,	 tax,	
depreciation	 and	 amortisation)	 increased	
by	 10%	 to	 £2.0m	 (2008:	 £1.8m),	
helped	 by	 cost-saving	 measures	 taken	
during	 the	 year.	 Operating	 profit	 was	
24%	 lower	 at	 £0.83m	 (2008:	 £1.09m)	
and	 profit	 before	 tax	 was	 34%	 lower	
at	 £0.6m	 (2008:	 £0.9m),	 the	 reduction	
due	 mainly	 to	 increased	 amortisation	
and	 exceptional	 depreciation	 on	 the	
write	 down	 of	 a	 property.	 Fully	 diluted	
earnings	 per	 share	 were	 1.94p	 (2008:	
2.27p).
There	 was	 an	 overall	 tax	 credit	 of	
£132,000	 (2008:	 £75,000	 charge),	
largely	 due	 to	 R&D	 tax	 credits	 received	
in	 Italy.
The	 earnings	 and	 profit	 figures	
mentioned	 above	 are	 stated	 after	
exceptional	 costs	 of	 £201,000	 which	
were	 incurred	 during	 the	 year.	 These	
included	 redundancy	 costs	 and	 the	
exceptional	 depreciation	 relating	 to	 the	
property	 write	 down.
The	 Company	 completed	 the	
refinancing	 of	 its	 UK	 loans	 in	 December	
2009,	 raising	 £2.0m.	 This	 was	 used	
to	 repay	 the	 Group’s	 outstanding	
balances	 with	 Fortis	 Bank	 and	 to	
improve	 working	 capital	 levels	 to	
pre-recession	 levels.
Offer
On	 16	 September	 2009,	 the	 Company	
announced	 that	 it	 was	 in	 talks	 which	
may	 or	 may	 not	 lead	 to	 an	 offer	 for	
the	 Company.	 Discussions	 with	 more	
than	 one	 party	 subsequently	 followed	
and,	 at	 the	 time	 of	 going	 to	 press,	 the	
Company	 is	 pleased	 to	 report	 that	
negotiations	 are	 now	 at	 an	 advanced	
stage	 and	 it	 expects	 to	 be	 able	 to	 make	
an	 announcement	 within	 the	 next	 week.	
There	 can	 however	 be	 no	 certainty	 that	
an	 offer	 will	 be	 made	 nor	 as	 to	 the	 terms	
on	 which	 any	 offer	 might	 be	 made.
Outlook
2009	 was	 the	 most	 serious	 market	
downturn	 for	 the	 Company	 since	 its	
formation	 in	 1988.	 It	 has	 weathered	
many	 recessions	 in	 that	 period	
and	 maintained	 a	 growing	 outlook.	
The	 severity	 of	 the	 2009	 downturn	
was	 countered	 by	 strong	 recurring	
revenues,	 the	 use	 of	 technology	 as	 a	
prime	 mover	 in	 reducing	 costs	 and	 the	
growing	 requirement	 on	 customers	
during	 harder	 times	 to	 produce	 new	
models	 of	 their	 products.
Although	 there	 are	 some	 signs	 of	
recovery	 in	 Europe	 and	 China,	 many	
of	 our	 major	 markets	 remain	 cautious,	
with	 2010	 investment	 forecasts	 in	
mould	 and	 stamping	 technologies	
remaining	 at	 similar	 levels	 to	 last	
year.	 Initial	 2010	 trading	 reflects	 this	
continuing	 lack	 of	 market	 confidence.
The	 efforts	 of	 the	 long	 serving	 staff	 of	
Vero	 Software	 remain	 of	 paramount	
importance	 for	 our	 success	 and	 they	
have	 proved	 themselves	 yet	 again	
within	 the	 extreme	 environment	 of	
2009.	 The	 board	 of	 Vero	 (the	 “Board”)	
would	 like	 to	 take	 this	 opportunity	
to	 thank	 them	 all	 for	 their	 focused	
contribution	 during	 the	 year.
Stephen	 Palframan
Chairman
7	 May	 2010
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Chairman’s	 statement V e r o S o f t w a r e P l c
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Our	 software	 at	 work
“The entire mould was designed, 
cut and built within 5 weeks.”
“Vero’s industry knowledge 
translates into an excellent 
product with unrivalled customer 
support.”
Bob Tunks
Vero helps ‘smart’ tooling 
production 
BK	 Tooling	 is	 a	 thriving	 sub-
contractor	 specialising	 in	 the	 design	
and	 production	 of	 mould	 tools	 and	
prototype/low	 volume	 plastic	 injection	
mouldings.	
BK	 are	 heavy	 users	 of	 CAD/CAM	 and	
have	 been	 continually	 adding	 to	 their	
software	 portfolio	 from	 Vero	 Software	
for	 over	 10	 years.	 It	 is	 the	 most	
recent	 addition	 VISI	 Flow,	 that	 has	
proved	 to	 be	 hugely	 beneficial	 during	
a	 project	 for	 the	 rear	 passenger	 arm	
rest	 for	 a	 prestige	 automotive	 supplier	
renowned	 for	 comfort	 and	 style.	
Before	 starting	 the	 tool	 design,	 a	
plastic	 flow	 analysis	 was	 undertaken	
to	 simulate	 the	 filling	 process.	
Importantly,	 the	 system	 highlighted	
areas	 where	 sink	 marks	 would	 occur	
due	 to	 internal	 voids	 and	 after	 further	
analysis,	 the	 tool	 design	 was	 modified	
to	 core	 out	 the	 problem	 areas.
Basing	 a	 tool	 design	 on	 a	 preventive	
flow	 analysis	 can	 detect	 potential	
manufacturing	 issues	 providing	 the	
maximum	 possible	 time	 frame	 for	
a	 corrective	 solution.	 Typically,	 a	
project	 of	 this	 complexity	 would	 take	
10	 -	 12	 weeks.	 However,	 using	 the	
entire	 suite	 of	 VISI	 software,	 the	 3D	
tool	 was	 designed,	 cut	 and	 built	
within	 5	 weeks.	
Concluding,	 Bob	 Tunks,	 owner	 of	
BK	 Tooling	 explains,	 “We	 often	 deal	
with	 complex	 products	 and	 without	
the	 use	 of	 intelligent	 software,	 we	
could	 never	 guarantee	 project	
completion	 and	 the	 supply	 of	 batch	
mouldings	 within	 such	 short	 time	
scales.	 Vero	 are	 highly	 regarded	 in	
our	 organisation	 and	 have	 become	 an	
integral	 part	 of	 our	 operations.	 Their	
industry	 knowledge	 translates	 into	
an	 excellent	 product	 with	 unrivalled	
customer	 support.”
VISI Flow results accurately match the 
actual moulding conditions.
Rendered image of completed  
mould tool A n n u a l R e p o r t a n d A c c o u n t s 2 0 0 9
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“The use of PEPS means that a 
program which may have taken 
half a day to complete with our 
old system is now available in half 
an hour” 
Mr Larrandabure Workshop 
Manager 
Time to change  
Based	 in	 Besançon	 (East	 of	 France),	
Fralsen	 is	 a	 company	 who	 specialise	
in	 the	 production	 of	 mechanical	
pieces	 for	 watches.	 Part	 of	 the	 Timex	
group,	 the	 main	 emphasis	 is	 the	
manufacture	 of	 business	 watches,	
but	 the	 Company	 is	 also	 involved	
in	 the	 design	 of	 cutting	 tools	 and	
injection	 moulds.	
Often	 working	 with	 tolerances	 of	 less	
than	 one	 micron	 (0.001mm),	 Fralsen	
recognised	 that	 cutting	 edge	 Wire	
EDM	 technology	 was	 essential	 to	 the	
future	 success	 of	 their	 manufacturing	
business.	 In	 this	 world	 of	 sharpness	
and	 precision,	 wire	 EDM	 technology	
enables	 the	 machine	 to	 cut	 intricate	
contours	 and	 internal	 corners	 with	
very	 small	 corner	 radii	 based	 on	
the	 wire	 diameter	 and	 spark	 gap.	
It	 becomes	 easy	 to	 cut	 square	
apertures	 without	 the	 need	 of	 splitting	
the	 mould	 or	 producing	 accurate	 pin	
holes	 in	 a	 plate	 after	 heat	 treatment.	
Support	 for	 unmanned	 or	 overnight	
machining	 is	 possible	 by	 leaving	 slugs	
attached	 while	 all	 of	 the	 preliminary	
cuts	 are	 taken.	 For	 example,	 taking	
all	 of	 the	 rough	 and	 finish	 cuts	 while	
leaving	 the	 tag	 in	 place	 and	 finally	
removing	 the	 tag	 and	 skimming	 the	
remaining	 area.	
After	 a	 lengthy	 software	 evaluation,	
and	 a	 recommendation	 from	 Makino,	
PEPS	 Wire	 EDM	 was	 selected	 to	
drive	 the	 Agié	 Evolution	 2	 and	 a	
Makino	 PH2	 wire	 EDM	 machines	 on	
the	 shopfloor.	
A choice based on experience 
Fralsen	 have	 over	 20	 years	
experience	 of	 Wire	 EDM	 technology.	
Mr	 Larrandabure,	 workshop	 manager	
explains	 the	 reasons	 for	 upgrading	
their	 technology.	 “Wire	 EDM	 is	
a	 vital	 part	 of	 our	 operation	 and	
we	 were	 looking	 to	 save	 time	 for	
the	 2	 engineers	 in	 charge	 of	 the	
EDM	 machines.	 In	 fact,	 we	 were	
convinced	 that	 using	 the	 latest	
computer	 technology,	 we	 could	 not	
only	 improve	 our	 productivity	 but	
also	 make	 better	 use	 of	 the	 machine	
capabilities”.	
Mr	 Larrandabure	 continues,	
“Customer	 data	 is	 commonly	
supplied	 as	 3D	 data	 so	 the	 software	
must	 be	 able	 to	 manage	 to	 read	
Parasolid	 and	 IGES	 files	 and	 extract	
the	 relevant	 EDM	 features.	 Whatever	
the	 quality	 of	 the	 model	 data,	 the	
software	 must	 know	 how	 to	 quickly	
generate	 the	 programs	 by	 removing	
the	 laborious	 tasks	 and	 helping	 the	
engineer	 with	 intelligent	 decisions.	 We	
want	 the	 engineers	 to	 concentrate	
on	 their	 job	 and	 not	 be	 constrained	
by	 the	 limitations	 imposed	 by	 the	
software.”	
With	 an	 existing	 CADCAM	 system	
already	 in	 place,	 it	 was	 imperative	
that	 the	 new	 solution	 was	 operational	
immediately	 with	 no	 down-turn	 in	
productivity.	 The	 selection	 of	 PEPS	
was	 based	 on	 real	 programming	 of	
live	 jobs	 and	 the	 guarantee	 of	 highly	
tuned	 post	 processors.	
Core insert machined using PEPS  
wire EDM V e r o S o f t w a r e P l c
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Business review
The	 Company	 sells	 software	 in	 a	
market	 niche	 that	 provides	 mould	 and	
die	 makers	 with	 the	 ability	 to	 design,	
simulate,	 plan,	 cost	 and	 machine	
their	 products	 across	 a	 wide	 range	
of	 sectors	 including	 automotive,	
aerospace,	 electronic,	 medical,	 toys	
and	 household	 goods.	 Last	 year,	 all	
of	 these	 sectors	 suffered	 some	 lack	
of	 confidence	 but	 sales	 continued	
to	 those	 looking	 to	 cut	 costs	 and	
improve	 productivity	 through	 software	
that	 reduced	 the	 resources	 required	 to	
produce	 the	 necessary	 moulds	
and	 dies.
The	 downturn	 was	 not	 spread	 evenly	
through	 the	 regions	 and	 while	 sales	
in	 Japan	 and	 Italy	 fell	 with	 respect	 to	
2008,	 those	 in	 North	 America,	 France	
and	 UK	 all	 grew.	 Even	 among	 the	
sectors	 supplied	 the	 effects	 were	
relatively	 unpredictable,	 with	 plastic	
based	 products	 doing	 less	 well	 than	
sheet	 metal,	 whilst	 software	 used	
solely	 by	 the	 automotive	 sector	
surprisingly	 grew	 substantially.
The	 worst	 hit	 sectors	 were	 those	
associated	 with	 machine	 tools,	
where	 worldwide	 investment	 in	 both	
machines	 and	 software	 were	 very	 low	
causing	 some	 of	 the	 major	 machine	
tool	 producing	 countries	 to	 initiate	 new	
incentives.
Software	 maintenance	 and	 service	
revenues	 held	 up	 well	 as	 a	 result	
of	 many	 customers	 relying	 on	 the	
productivity	 improvements	 brought	
in	 through	 new	 releases	 and	 the	
expertise	 of	 the	 product	 support.
Operating expenses
As	 a	 result	 of	 the	 anticipated	 fall	 in	
revenue,	 the	 Company	 took	 swift	
action	 at	 the	 beginning	 of	 2009	 to	
reduce	 budgeted	 operating	 costs.	
This	 was	 later	 supplemented	 by	 a	
temporary	 reduction	 in	 personnel	
costs,	 mostly	 through	 short	 time	
working	 during	 the	 summer	 and	
autumn	 periods.	 Tight	 control	 of	
expenditure	 led	 to	 a	 13%	 reduction	 in	
selling	 expenses	 before	 exceptional	
items.	 Administrative	 expenses	 rose	
by	 7%	 but	 this	 was	 largely	 as	 a	 result	
of	 exchange	 rate	 movements,	 with	 the	
underlying	 administrative	 costs	 in	 local	
currency	 lower	 than	 in	 2008.
Product development
Product	 development	 expenditure	
of	 £1,303,000	 has	 been	 capitalised	
(2008:	 £1,008,000)	 in	 accordance	
with	 International	 Financial	 Reporting	
Standards.	 The	 Board	 strongly	
believes	 that	 the	 continued	 investment	
in	 product	 development	 is	 fundamental	
to	 current	 software	 sales,	 future	
growth	 and	 customer	 loyalty.
The	 product	 solutions	 are	 increasingly	
being	 applied	 to	 the	 whole	 process	
relating	 to	 mould	 and	 die	 production	
and	 from	 product	 design	 and	 planning	
to	 mould	 performance	 analysis,	
building	 and	 precision	 machining.
Taxation and earnings per share
Earnings	 before,	 interest,	 tax,	
depreciation	 and	 amortisation	
(EBITDA)	 were	 £2.0m,	 an	 increase	
of	 10%	 compared	 to	 the	 previous	
year	 (2008:	 £1.8m).	 The	 Group	
also	 recorded	 a	 pre-tax	 profit	 after	
exceptionals	 of	 £0.6m	 (2008:	 £.0.9m).	
This	 reduction	 was	 mainly	 a	 result	 of	
increased	 amortisation	 charges	 and	 an	
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Chief	 executive’s	 review A n n u a l R e p o r t a n d A c c o u n t s 2 0 0 9
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exceptional	 write	 down	 of	 a	 property.	
The	 Group	 received	 a	 net	 tax	 credit	 of	
£0.13m	 (2008:	 £0.07m	 charge).	 The	
tax	 credit	 has	 arisen	 mainly	 because	
of	 research	 and	 development	 tax	
credits	 received	 in	 Italy	 and	 the	 UK.	
Exceptional	 costs	 of	 £201,000	 (2008:	
£445,000)	 were	 incurred	 during	 the	
year.	 These	 included	 redundancy	
costs	 of	 £46,000,	 a	 £26,000	 provision	
for	 an	 onerous	 lease	 and	 £129,000	
exceptional	 depreciation	 relating	 to	
the	 write	 down	 of	 a	 property.	 Post	 tax	
profit	 after	 exceptionals	 was	 £0.74m	
(2008:	 £0.85m)	 and	 basic	 earnings	 per	
share	 were	 2.00p	 (2008:	 2.28p).
Cash flow and net funds
Cash	 flows	 from	 operating	 activities	 in	
2009	 were	 £1.7m	 compared	 to	 £1.9m	
in	 2008.	 The	 cash	 balances	 at	 the	
year	 end	 were	 £2.3m	 (2008:	 £1.6m),	
with	 £1.5m	 of	 short-term	 borrowings	
(2008:	 £1.5m),	 resulting	 in	 net	 funds	
of	 £0.87m	 (2008:	 £0.09m).	 Net	 debt	
reduced	 to	 £2.2m	 from	 £2.9m.	 The	
Company	 completed	 a	 refinancing	 of	
its	 UK	 loans	 in	 December	 2009	 with	 an	
advance	 of	 £2m	 from	 the	 Capital	 for	
Enterprise	 Fund.	 These	 funds	 were
used	 to	 repay	 the	 Group’s	 outstanding	
balances	 with	 Fortis	 Bank	 and	 restore	
working	 capital	 levels	 to	 pre-recession	
levels.
Interest	 payments	 during	 the	 year	 were	
£159,000	 (2008:	 £213,000).
Summary
The	 Company	 proved	 to	 be	 fairly	
resilient	 to	 a	 strong	 global	 recession	
through	 its	 hallmarks	 of	 technological	
innovation,	 customer	 support	 and	
repeat	 transactions.	
2009	 was	 a	 predictably	 difficult	 year	
for	 trading	 but	 the	 Company	 managed	
to	 broadly	 reduce	 its	 costs	 in	 line	 with	
revenues,	 in	 a	 timely	 fashion,	 so	 as	 to	
maintain	 profitability	 and	 cash	 flow.
A	 number	 of	 product	 improvements	
have	 still	 to	 come	 on	 stream	 in	 2010	
and	 these	 should	 provide	 further	
draught-proofing	 against	 the	 cold	 wind	
of	 recessionary	 times.
Don Babbs
Chief Executive
7	 May	 2010 V e r o S o f t w a r e P l c
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Board	 of	 directors
 
The Board
The	 Board	 is	 responsible	 for	 creating	 value	 for	 shareholders,	 determining	 strategy,	 investment	 and	 acquisition	 policy,	
consideration	 and	 approval	 of	 significant	 expenditure,	 financing	 and	 legal	 matters.	 The	 Group	 is	 currently	 led	 and	 controlled	
by	 a	 Board	 consisting	 of	 four	 Executive	 Directors	 and	 two	 Non-executive	 Directors.	 It	 is	 chaired	 by	 Stephen	 Palframan	
who	 is	 a	 non-executive	 Director.	 The	 Board	 considers	 that	 the	 Non-executive	 Directors	 are	 independent	 and	 that	 each	 has	
specific	 expertise	 and	 experience,	 which	 enhances	 the	 knowledge,	 judgment	 and	 overall	 performance	 of	 the	 Board.	
Don Babbs
The	 Chief	 Executive	 of	 the	 Company	 since	 1988,	 started	
his	 career	 as	 a	 sales	 engineer	 for	 the	 British	 Aerospace	
Concorde	 sales	 team.	 He	 joined	 British	 Olivetti	 in	 1980	
where	 he	 became	 Software	 Manager	 (CAD/CAM)	 and	
ultimately	 Marketing	 Manger	 (CAD/CAM).	 During	 this	
time	 he	 investigated	 the	 prospects	 of	 solid	 modelling	
and	 managed	 a	 worldwide	 subsidiary	 network.	 He	 took	
on	 responsibility	 for	 corporate	 marketing	 of	 engineering	
workstations	 and	 CAD/CAM	 software	 for	 Olivetti	 in	 Italy	
before	 jointly	 establishing	 the	 Company	 in	 1988.
Gerard O’Driscoll
The	 Research	 and	 Development	 Director	 of	 the	
Company	 since	 1988,	 was	 employed	 at	 British	 Olivetti	
from	 1976	 to	 1981	 as	 a	 sales	 engineer	 and	 later	
Marketing	 Manager	 for	 CAM	 systems	 at	 British	 Olivetti,	
Marketing	 Executive	 CAD/CAM	 Systems	 for	 Racal	
Redac	 Ltd.	 and	 ultimately	 as	 Senior	 Consultant	 for	 CAD	
systems	 to	 Olivetti	 in	 Italy.	 He	 was	 one	 of	 the	 first	 to	
develop	 a	 2D	 CAD	 system.
Richard Youhill
Appointed	 Sales	 Director	 in	 2001	 and	 subsequently	
Operations	 Director	 in	 2009.	 He	 joined	 the	 Group	 as	 UK	
Sales	 Manager	 in	 1993	 and	 has	 been	 responsible	 for	
both	 direct	 and	 dealer	 sales	 throughout	 the	 expansion	
of	 Vero	 subsidiary	 operations.	 Prior	 to	 joining	 the	
Company,	 he	 was	 Sales	 Manager	 for	 a	 UK	 based	
supplier	 of	 CAD/CAM	 software	 and	 has	 been	 involved	 in	
international	 sales	 and	 marketing	 of	 technical	 software	
solutions	 since	 1988.
Julie Randall
Appointed	 Finance	 Director	 in	 September	 2003.	 Prior	
to	 her	 appointment	 she	 was	 employed	 in	 the	 role	 of	
Group	 Financial	 Controller	 at	 Vero.	 She	 qualified	 as	 a	
Chartered	 Accountant	 in	 1988	 and	 held	 a	 number	 of	
senior	 accounting	 positions	 in	 both	 private	 and	 public	
companies	 in	 the	 manufacturing	 and	 financial	 services	
sectors	 before	 joining	 the	 Group	 in	 June	 2002. A n n u a l R e p o r t a n d A c c o u n t s 2 0 0 9
9
17872	 19/05/2010	 Proof	8
9
 
Stephen Palframan
The	 non-executive	 Chairman	 of	 the	 Company	 since	
1999,	 was	 formerly	 Chief	 Executive	 of	 Bristow	
Helicopter	 Group	 Ltd,	 the	 world’s	 largest	 operator	 of	
twin-engined	 helicopters.	 He	 joined	 Bristow	 in	 1988	 as	
Finance	 Director	 and	 was	 instrumental	 in	 the	 £200m	
management	 buyout	 in	 1991	 from	 its	 parent	 company.	
As	 Chief	 Executive	 in	 1996	 he	 oversaw	 the	 subsequent	
sale	 of	 Bristow	 to	 an	 American	 group.	 Prior	 to	 Bristow	
he	 held	 senior	 financial	 positions	 with	 Northern	
Engineering	 Industries	 plc	 (now	 part	 of	 Rolls-Royce	 plc),	
Nabisco	 Brands	 Inc.	 and	 Ingersoll-Rand	 Inc.	 He	 qualified	
as	 a	 Chartered	 Management	 Accountant	 in	 1979.	
Elliot I. Miller
The	 non-executive	 Deputy	 Chairman	 of	 the	 Company	
since	 1997,	 is	 an	 American	 lawyer	 who	 has	 practiced	
law	 in	 New	 York	 and	 Connecticut	 since	 1958.	 He	
has	 broad	 legal	 experience	 in	 corporate,	 partnership,	
securities	 and	 tax	 matters,	 including	 equity	 and	 debt	
financing	 transactions	 in	 the	 USA	 and	 internationally.	 He	
has	 served	 on	 the	 Boards	 of	 Belgian,	 Indian	 and	 French	
joint	 ventures	 as	 well	 as	 American	 Companies.	 Mr.	
Miller’s	 responsibilities	 are	 primarily	 business	 and	 legal. V e r o S o f t w a r e P l c
10
17872	 19/05/2010	 Proof	8
Directors	 and	 advisers
 
Directors Stephen William Palframan, Chairman*
 Elliot I. Miller (USA), Deputy Chairman*
 Donald Alan Babbs, Chief Executive
 Gerard George O’Driscoll, Research and Development Director
 Richard Youhill, Sales Director
 Julie Randall, Finance Director
 *Non-executive director
Secretary Julie	 Randall
Registered office Hadley	 House
	 Bayshill	 Road
	 Cheltenham
	 Gloucestershire	 GL50	 3AW
Registered number 3461213
Web site http://www.vero-software.com
Nominated Adviser Daniel	 Stewart	 &	 Company
and Broker Becket	 House
 36	 Old	 Jewry
	 London	 EC2R	 8DD
Auditors Moore	 Stephens	 LLP
	 150	 Aldersgate	 Street
	 London	 EC1A	 4AB
Solicitors Rickerbys	 LLP
	 Ellenborough	 House
	 Wellington	 Street
	 Cheltenham	 GL50	 1YD
Registrars Capita	 IRG
	 Northern	 House
	 Woodsome	 Park
	 Fenay	 Bridge
	 Huddersfield	 HD8	 0GA A n n u a l R e p o r t a n d A c c o u n t s 2 0 0 9
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17872	 19/05/2010	 Proof	8
The	 directors	 present	 their	 annual	 report	 and	 audited	 financial	 statements	 for	 the	 year	 ended	 31	 December	 2009	 for	 Vero	
Software	 plc,	 company	 number	 3461213.
Principal activities
The	 principal	 activities	 of	 the	 Group	 during	 the	 year	 were	 the	 development,	 marketing	 and	 distribution	 of	 computer	 aided	
design	 and	 computer	 aided	 manufacturing	 (“CAD/CAM”)	 software.
Business review
In	 accordance	 with	 section	 S417	 of	 the	 Companies	 Act	 2006,	 a	 review	 of	 the	 development	 and	 performance	 of	 the	
business	 of	 the	 Group	 including	 the	 financial	 performance	 during	 the	 year	 is	 set	 out	 in	 the	 Chairman’s	 statement	 and	 Chief	
executive’s	 review	 section	 of	 this	 Annual	 Report	 on	 pages	 3	 and	 6	 to	 7	 which	 is	 incorporated	 into	 this	 report	 by	 reference.	
The	 directors	 consider	 that	 the	 following	 measures	 are	 key	 performance	 indicators:
Financial 2009 2008
Revenue	 growth (8)% 10%
Adjusted	 EBITDA	 growth (9)% 45%
Adjusted	 EBITDA	 is	 a	 non	 GAAP	 measure	 which	 excludes	 capitalised	 development	 and	 exceptional	 costs.
Non financial 2009 2008
Number	 of	 licences	 on	 maintenance	 contract 7,689 7,349
The	 number	 of	 licences	 on	 maintenance	 is	 an	 important	 indicator	 of	 customer	 satisfaction	 and	 recurring	 revenues.
 2009 2008
Staff	 turnover 8% 10%
Recruitment	 and	 retention	 of	 staff	 is	 one	 of	 the	 key	 risks	 facing	 the	 business,	 therefore	 staff	 turnover	 ratios	 are	 an	 important	
indicator	 of	 how	 we	 are	 managing	 that	 risk.	 The	 2009	 figure	 includes	 leavers	 arising	 from	 restructuring	 in	 the	 UK,	 North	
America	 and	 China,	 this	 accounted	 for	 4%	 of	 the	 total	 turnover	 (2008:	 5%	 related	 to	 restructuring).
Results and dividends
The	 consolidated	 statement	 of	 financial	 performance	 is	 set	 out	 on	 page	 18.	 The	 directors	 do	 not	 propose	 payment	 of	 a	
dividend.
Research and development
The	 Group	 continues	 an	 active	 programme	 of	 research	 and	 development,	 enhancing	 and	 updating	 current	 products	 	
and	 extending	 the	 product	 range.
11
Directors’	 report V e r o S o f t w a r e P l c
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17872	 19/05/2010	 Proof	8
Risk Area
International trade risks
The	 Group	 generates	 a	 significant	 portion	 of	 its	 revenue	
outside	 the	 United	 Kingdom	 and	 is	 therefore	 subject	
to	 additional	 risks	 associated	 with	 the	 extent	 of	 its	
international	 operations.
Vero	 receives	 a	 substantial	 proportion	 of	 its	 revenues	 in	
Euros,	 US	 Dollars	 and	 Japanese	 Yen	 therefore	 adverse	
fluctuations	 in	 exchange	 rates	 can	 significantly	 affect	 its	
revenue	 and	 reported	 profits.
Intellectual property
The	 Group’s	 software	 products	 are	 the	 result	 of	 a	
considerable	 investment	 in	 research	 and	 development.	
Inability	 to	 protect	 them	 could	 reduce	 the	 value	 of	 the	
Group’s	 products	 and	 services.
The	 Group	 has	 developed	 and	 utilises	 software	 in	
collaboration	 with	 various	 software	 developers.	 In	 particular	
the	 termination	 of	 the	 Group’s	 licensing	 agreements	 for	
technologies	 from	 third	 parties	 could	 result	 in	 significant	
costs,	 delays	 in	 product	 development	 and	 affect	 the	
Group’s	 profitability.	
Cutomers 
The	 Group	 is	 exposed	 to	 the	 potential	 insolvency	 of	 its	
customers.
Competition 
The	 Group	 faces	 competition	 from	 numerous	 companies	
for	 all	 of	 its	 products.	 Product	 innovations	 or	 technical	
advances	 by	 competitors	 could	 adversely	 affect	 the	 Group.
Recruitment and retention
There	 is	 limited	 availability	 of	 employees	 and	 distributors	
around	 the	 world	 who	 have	 the	 necessary	 technical	 skills	
to	 develop,	 sell	 and	 support	 our	 products.	 The	 ability	 to	
attract,	 retain	 and	 motivate	 people	 with	 the	 appropriate	 skills	
is	 an	 important	 factor	 in	 the	 Group’s	 ability	 to	 expand.
Acquisition integration
The	 Group	 is	 an	 active	 acquirer:	 acquisitions	 may	 involve	 risks	
that	 might	 have	 a	 material	 impact	 on	 the	 Group.	 Any	 failure	
in	 the	 Group’s	 due	 diligence	 of	 the	 operating	 and	 financial	
condition	 of	 these	 acquired	 businesses,	 or	 of	 their	 integration	
into	 the	 Group’s	 operations,	 could	 have	 an	 adverse	 impact	 on	
the	 Group’s	 businesses	 or	 the	 Group	 as	 a	 whole.
Management Action/Mitigation
The	 geographic	 spread	 of	 our	 markets	 helps	 to	 minimise	
risk	 as	 conditions	 in	 one	 market	 are	 not	 always	 reflected	
elsewhere	 in	 the	 world.	
Exchange	 rate,	 credit	 and	 interest	 rate	 risks	 are	 discussed	
in	 note	 29	 to	 the	 accounts.
The	 Group	 protects	 its	 software	 using	 a	 combination	 of	
encrypted	 hardware	 and	 software	 devices.	
The	 Group	 protects	 its	 proprietary	 rights	 to	 its	 software	
with	 license	 agreements	 and	 with	 the	 registration	 of	
trademarks.	 Patent	 applications	 for	 our	 VISI-flow	 product	
have	 been	 filed	 in	 the	 US.	
The	 Group	 has	 entered	 into	 agreements	 that	 provide	 for	
the	 Group’s	 right	 to	 market	 and	 distribute	 the	 products	
containing	 third	 party	 component	 technologies.
The	 exposure	 is	 spread	 over	 a	 large	 number	 of	 customers	
in	 different	 geographic	 locations	 and	 different	 market	
sectors.
Credit	 risks	 of	 new	 customers	 must	 be	 assessed	 locally	
before	 entering	 into	 contracts	 and	 balances	 of	 existing	
customers	 are	 reviewed	 monthly.
Credit	 risks	 are	 further	 discussed	 in	 note	 29	 to	 the	
accounts.
The	 Group	 has	 a	 policy	 of	 continuous	 research	 and	
development	 and	 commits	 a	 significant	 amount	 of	
expenditure	 to	 this.	 The	 products	 of	 competitors	 are	 also	
monitored.
Vero	 aims	 to	 foster	 productive	 and	 mutually	 beneficial	
working	 relationships	 with	 distributors	 and	 provide	 a	
positive	 working	 environment	 and	 competitive	 pay	 levels	 in	
order	 to	 recruit	 and	 retain	 the	 employees	 that	 it	 needs.
These	 risks	 are	 mitigated	 by	 due	 diligence,	 forecasting	 	
and	 planning	 and,	 where	 practicable,	 by	 representations	
and	 warranties	 and	 indemnities	 from	 the	 vendors.	
12
Directors’	 report
continued
Risk factors
Vero’s	 business	 is	 subject	 to	 a	 number	 of	 risks	 and	 uncertainties	 which	 could	 materially	 adversely	 affect	 our	 business,	
financial	 condition,	 results	 of	 our	 operations	 or	 share	 price.	 The	 factors	 discussed	 in	 this	 section	 are	 not	 an	 exhaustive	 list	
but	 are	 considered	 some	 of	 the	 principal	 risks	 and	 uncertainties	 faced	 by	 the	 business.	 Our	 aim	 is	 to	 manage	 and	 control	
identified	 risk	 through	 established	 processes	 but	 it	 cannot	 be	 eliminated	 completely. A n n u a l R e p o r t a n d A c c o u n t s 2 0 0 9
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17872	 19/05/2010	 Proof	8
Directors and their interests
The	 directors	 of	 the	 Company	 and	 their	 biographies	 are	 set	 out	 on	 pages	 8	 to	 9.	 All	 directors	 held	 office	 throughout	 the	 year.
The	 details	 of	 the	 directors’	 beneficial	 holdings	 at	 31	 December	 2009	 are	 given	 below.
	 Beneficial	 holdings
	 31	 December
	 2009	 2008
	 Ordinary	 Ordinary	 %	 of	 issued
	 0.5 pence shares	 0.5	 pence	 shares	 Share	 capital
Donald	 Alan	 Babbs	 4,903,380	 4,903,380	 13.2
Gerard	 George	 O’Driscoll	 558,000	 558,000	 1.5
Elliot	 I.	 Miller*	 20,000	 20,000	 0.1
Stephen	 William	 Palframan*	 30,000	 30,000	 0.1
Richard	 Youhill	 –	 –	 –
Julie	 Randall	 –	 –	 –
*	 Non-executive	 directors
Mr	 Babbs’	 interests	 include	 58,000	 shares,	 held	 by	 his	 wife	 Nicoletta	 Babbs.
Directors’ interests in share options
	 At 31	 At	 31
	 December	 December	 Option	 Period
	 2009	 2008	 price	 exercisable
Richard	 Youhill	 500,000	 500,000	 14p	 22/10/07	 –	 21/10/11
Gerard	 George	 O’Driscoll	 	 200,000	 200,000	 14p	 22/10/07	 –	 21/10/11
Julie	 Randall	 	 200,000	 200,000	 14p	 22/10/07	 –	 21/10/11
Options	 were	 granted	 under	 the	 EMI	 scheme.
Details	 of	 employee	 share	 options	 are	 shown	 in	 Note	 25.
Substantial shareholdings
On	 4	 May	 2010,	 the	 Company	 had	 been	 notified	 or	 was	 aware	 of	 the	 following	 shareholders	 holding	 more	 than	 3	 per	 cent	
of	 the	 issued	 share	 capital	 of	 the	 Company.	 Apart	 from	 these,	 the	 directors	 are	 not	 aware	 of	 any	 individual	 interest	 or	 group	
of	 interests	 held	 by	 persons	 acting	 together,	 which	 exceeds	 3	 per	 cent	 of	 the	 issued	 share	 capital.
	 Ordinary
	 0.5	 pence	 %	 of	 issued
	 shares	 share	 capital
P.	 Gyllenhammar	 8,553,722	 23.0
D.	 A.	 Babbs	 4,903,380	 13.2
E.	 Galardo	 3,395,474	 	 9.1
Artemis	 AIM	 VCT	 plc	 2,325,582	 	 6.2
Baronsmead	 VCT	 2	 plc	 2,325,582	 	 6.2
Baronsmead	 VCT	 plc	 1,600,000	 	 4.3
Baronsmead	 VCT	 3	 plc	 1,395,349	 	 3.7
M.	 Cignetti	 1,259,866	 	 3.4
13 V e r o S o f t w a r e P l c
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17872	 19/05/2010	 Proof	8
Creditor payment policy and practice
The	 Group’s	 policy	 is	 to	 fix	 payment	 terms	 when	 agreeing	 the	 terms	 of	 each	 transaction.	 It	 is	 the	 Group’s	 general	 policy	 to	
pay	 suppliers	 according	 to	 the	 agreed	 terms	 and	 conditions	 provided	 the	 supplier	 has	 agreed	 with	 those	 terms.	 Trade	 creditor	
days	 of	 the	 Company	 and	 the	 Group	 for	 the	 year	 ended	 31	 December	 2009	 were	 94	 days	 and	 46	 days	 respectively.	 This	
represents	 the	 ratio,	 expressed	 in	 days	 between	 the	 amounts	 invoiced	 to	 the	 Company	 and	 Group	 by	 its	 suppliers	 in	 the	 year	
and	 the	 amounts	 due,	 at	 the	 year	 end	 to	 trade	 creditors	 within	 one	 year.
Annual General Meeting
The	 Annual	 General	 Meeting	 will	 be	 held	 at	 the	 Company’s	 Head	 Office,	 Hadley	 House,	 Bayshill	 Road,	 Cheltenham,	 	
GL50	 3AW,	 on	 a	 date	 to	 be	 advised.	
Corporate governance
The	 directors	 recognise	 the	 importance	 of	 sound	 corporate	 governance	 and	 intend	 that	 the	 Company	 will	 comply	 with	 the	
main	 provisions	 of	 the	 Combined	 Code	 on	 Corporate	 Governance	 issued	 by	 the	 Financial	 Reporting	 Council	 insofar	 as	 they	
are	 appropriate,	 given	 the	 Company’s	 size	 and	 stage	 of	 development,	 and	 will	 endeavour	 to	 follow	 the	 recommendations	
on	 corporate	 governance	 contained	 in	 the	 Corporate	 Governance	 Guidance	 for	 AIM	 Companies.
The	 Board	 comprises	 4	 executive	 and	 2	 non-executive	 directors,	 who	 meet	 on	 a	 regular	 basis	 throughout	 the	 year.
The	 Board	 maintains	 a	 formal	 schedule	 of	 matters	 reserved	 for	 its	 approval	 and	 is	 responsible	 for	 formulating,	 reviewing	 	
and	 approving	 the	 Group’s	 strategy,	 budgets,	 major	 items	 of	 capital	 expenditure,	 acquisitions	 and	 appointment	 of	 	
senior	 personnel.
Board committees
The	 Board	 has	 delegated	 certain	 responsibilities	 to	 Board	 Committees	 which	 operate	 within	 defined	 terms	 which	 are	 set	
out	 below.	
An	 Audit	 Committee	 has	 been	 established	 which	 comprises	 the	 two	 non-executive	 directors.	 This	 committee	 is	 responsible	
for	 ensuring	 that	 the	 financial	 performance	 of	 the	 Group	 is	 properly	 reported	 on	 and	 monitored,	 and	 for	 meeting	 the	
auditors	 and	 reviewing	 reports	 from	 the	 auditors	 relating	 to	 the	 accounts	 and	 internal	 control	 systems.	 At	 the	 invitation	 of	
the	 Audit	 Committee,	 the	 Finance	 Director	 usually	 attends	 meetings.
A	 Remuneration	 Committee	 has	 been	 established	 which	 comprises	 the	 two	 non-executive	 directors.	 Its	 main	 function	 is	 to	
review	 the	 performance	 of	 the	 executive	 directors,	 to	 set	 the	 scale	 and	 structure	 of	 their	 remuneration	 and	 the	 basis	 of	 their	
service	 agreements	 with	 due	 regard	 to	 the	 interests	 of	 the	 shareholders.	
The	 Board	 has	 adopted	 the	 Model	 Code	 for	 directors’	 dealings	 in	 shares	 as	 applicable	 to	 AIM	 companies	 and	 will	 take	 all	
reasonable	 steps	 to	 ensure	 compliance	 by	 the	 directors	 and	 by	 relevant	 employees.
14
Directors’	 report
continued A n n u a l R e p o r t a n d A c c o u n t s 2 0 0 9
15
17872	 19/05/2010	 Proof	8
Share option schemes
The	 Company	 operates	 share	 option	 schemes	 as	 summarised	 below,	 which	 are	 administered	 by	 the	 Remuneration	
Committee.	 Options	 granted	 under	 all	 of	 the	 available	 option	 schemes	 will	 not,	 in	 aggregate,	 exceed	 10%	 of	 the	 Holding	
Company’s	 issued	 share	 capital.	 The	 directors	 believe	 that	 the	 success	 of	 the	 Company	 depends	 to	 a	 high	 degree	 on	
the	 future	 performance	 of	 the	 management	 team.	 The	 directors	 also	 recognise	 the	 importance	 of	 ensuring	 that	 all	 key	
employees	 are	 incentivised	 and	 identify	 closely	 with	 the	 profitability	 of	 the	 Company.
EMI scheme
Options	 are	 exercisable	 after	 3	 years	 and	 will	 lapse	 if	 not	 exercised	 within	 7	 years.
Approved scheme
Options	 are	 exercisable	 after	 3	 years	 and	 will	 lapse	 if	 not	 exercised	 within	 10	 years.	 Under	 this	 scheme,	 which	 has	 been	
approved	 by	 the	 Inland	 Revenue,	 the	 maximum	 aggregate	 market	 value	 of	 options,	 which	 may	 be	 issued	 to	 a	 participant,	
may	 not	 exceed	 £30,000.
Unapproved scheme
Options	 are	 exercisable	 after	 3	 years	 and	 will	 lapse	 if	 not	 exercised	 within	 7	 years.
Shadow scheme
This	 scheme	 provides	 a	 similar	 incentive	 to	 the	 above	 schemes	 by	 way	 of	 a	 cash	 equivalent.	 The	 main	 purpose	 of	 the	
scheme	 is	 to	 enable	 the	 Company	 to	 provide	 equity	 related	 incentives	 to	 employees	 whose	 participation	 in	 the	 Approved	
Scheme	 or	 Unapproved	 Scheme,	 may,	 at	 the	 relevant	 time,	 not	 be	 practicable.
Statement of Directors’ responsibilities
The	 directors	 are	 responsible	 for	 preparing	 the	 Directors’	 report	 and	 the	 financial	 statements	 in	 accordance	 with	 applicable	
law	 and	 regulations.
Company	 law	 requires	 the	 directors	 to	 prepare	 financial	 statements	 for	 each	 financial	 year.	 Under	 that	 law	 the	 directors	
have	 elected	 to	 prepare	 the	 financial	 statements	 in	 accordance	 with	 IFRS	 as	 adopted	 by	 the	 European	 Union	 and	
applicable	 law.	 The	 financial	 statements	 must,	 in	 accordance	 with	 IFRS	 as	 adopted	 by	 the	 European	 Union,	 present	 fairly	
the	 financial	 position	 and	 performance	 of	 the	 Company;	 such	 references	 in	 the	 UK	 Companies	 Act	 2006	 to	 such	 financial	
statements	 giving	 a	 true	 and	 fair	 view	 are	 references	 to	 their	 achieving	 a	 fair	 presentation.	 Under	 company	 law	 directors	
must	 not	 approve	 the	 financial	 statements	 unless	 they	 are	 satisfied	 that	 they	 give	 a	 true	 and	 fair	 view.	 In	 preparing	 these	
financial	 statements,	 the	 directors	 are	 required	 to:
● l select	 suitable	 accounting	 policies	 and	 then	 apply	 them	 consistently;
● l make	 judgements	 and	 accounting	 estimates	 that	 are	 reasonable	 and	 prudent;
● l state	 whether	 the	 financial	 statements	 have	 been	 prepared	 in	 accordance	 with	 IFRS	 as	 adopted	 by	 the	 European	
Union;
● l prepare	 the	 financial	 statements	 on	 the	 going	 concern	 basis	 unless	 it	 is	 inappropriate	 to	 presume	 that	 the	 Company	
will	 continue	 in	 business.
15 V e r o S o f t w a r e P l c
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17872	 19/05/2010	 Proof	8
The	 directors	 are	 responsible	 for	 keeping	 adequate	 accounting	 records	 that	 are	 sufficient	 to	 show	 and	 explain	 the	
Company’s	 transactions	 and	 disclose	 with	 reasonable	 accuracy	 at	 any	 time	 the	 financial	 position	 of	 the	 Company	 and	
enable	 them	 to	 ensure	 that	 the	 financial	 statements	 comply	 with	 the	 Companies	 Act	 2006	 and,	 as	 regards	 the	 Group	
financial	 statements,	 Article	 4	 of	 the	 IAS	 Regulation.	 They	 are	 also	 responsible	 for	 safeguarding	 the	 assets	 of	 the	 Company	
and	 hence	 for	 taking	 reasonable	 steps	 for	 the	 prevention	 and	 detection	 of	 fraud	 and	 other	 irregularities.
The	 directors	 are	 responsible	 for	 the	 maintenance	 and	 integrity	 of	 the	 corporate	 and	 financial	 information	 included	 on	 the	
Company’s	 website.	 Legislation	 in	 the	 United	 Kingdom	 governing	 the	 preparation	 and	 dissemination	 of	 financial	 statements	
may	 differ	 from	 legislation	 in	 other	 jurisdictions.
Disclosure of information to auditors
As	 far	 as	 each	 director,	 who	 is	 in	 office	 at	 the	 time	 when	 the	 directors’	 report	 is	 approved,	 is	 aware,	 there	 is	 no	 relevant	
information	 of	 which	 the	 auditors	 are	 unaware	 and	 each	 such	 director	 has	 taken	 all	 reasonable	 steps	 to	 make	 themselves	
aware	 of	 any	 relevant	 audit	 information,	 including	 making	 appropriate	 enquiries	 of	 fellow	 directors,	 and	 to	 establish	 that	 the	
auditors	 are	 aware	 of	 that	 information.
By	 Order	 of	 the	 Board
Julie Randall
Secretary
7	 May	 2010
Directors’	 report
continued A n n u a l R e p o r t a n d A c c o u n t s 2 0 0 9
17
17872	 19/05/2010	 Proof	8
We	 have	 audited	 the	 Group	 financial	 statements	 of	 Vero	 Software	 Plc	 for	 the	 year	 ended	 31	 December	 2009	 which	 are	 set	
out	 on	 pages	 18	 to	 48.	 The	 financial	 reporting	 framework	 that	 has	 been	 applied	 in	 their	 preparation	 is	 applicable	 law	 and	
International	 Financial	 Reporting	 Standards	 (IFRSs)	 as	 adopted	 by	 the	 European	 Union.
This	 report	 is	 made	 solely	 to	 the	 Company’s	 members,	 as	 a	 body,	 in	 accordance	 with	 Chapter	 3	 of	 Part	 16	 of	 the	
Companies	 Act	 2006.	 Our	 audit	 work	 has	 been	 undertaken	 so	 that	 we	 might	 state	 to	 the	 Company’s	 members	 those	
matters	 we	 are	 required	 to	 state	 to	 them	 in	 an	 auditor’s	 report	 and	 for	 no	 other	 purpose.	 To	 the	 fullest	 extent	 permitted	
by	 law,	 we	 do	 not	 accept	 or	 assume	 responsibility	 to	 anyone	 other	 than	 the	 Company	 and	 the	 Company’s	 members	 as	 a	
body,	 for	 our	 audit	 work,	 for	 this	 report,	 or	 for	 the	 opinions	 we	 have	 formed.
Respective responsibilities of directors and auditors 
As	 explained	 more	 fully	 in	 the	 Directors’	 Responsibilities	 Statement	 set	 out	 on	 page	 15,	 the	 directors	 are	 responsible	 for	 the	
preparation	 of	 the	 Group	 financial	 statements	 and	 for	 being	 satisfied	 that	 they	 give	 a	 true	 and	 fair	 view.	 Our	 responsibility	 is	
to	 audit	 the	 Group	 financial	 statements	 in	 accordance	 with	 applicable	 law	 and	 International	 Standards	 on	 Auditing	 (UK	 and	
Ireland).	 Those	 standards	 require	 us	 to	 comply	 with	 the	 Auditing	 Practices	 Boards	 (APB’s)	 Ethical	 Standards	 for	 Auditors.
Scope of the audit of the financial statements 
An	 audit	 involves	 obtaining	 evidence	 about	 the	 amounts	 and	 disclosures	 in	 the	 financial	 statements	 sufficient	 to	 give	
reasonable	 assurance	 that	 the	 financial	 statements	 are	 free	 from	 material	 misstatement,	 whether	 caused	 by	 fraud	 or	 error.	
This	 includes	 an	 assessment	 of:	 whether	 the	 accounting	 policies	 are	 appropriate	 to	 the	 Group’s	 circumstances	 and	 have	
been	 consistently	 applied	 and	 adequately	 disclosed;	 the	 reasonableness	 of	 significant	 accounting	 estimates	 made	 by	 the	
directors;	 and	 the	 overall	 presentation	 of	 the	 financial	 statements.
Opinion on financial statements
In	 our	 opinion	 the	 Group	 financial	 statements:
● l give	 a	 true	 and	 fair	 view	 of	 the	 state	 of	 the	 Group’s	 affairs	 as	 at	 31	 December	 2009	 and	 of	 its	 profit	 for	 the	 year	 then	
ended;
● l have	 been	 properly	 prepared	 in	 accordance	 with	 IFRSs	 as	 adopted	 by	 the	 European	 Union;	 and
● l have	 been	 prepared	 in	 accordance	 with	 the	 requirements	 of	 the	 Companies	 Act	 2006	 and	 Article	 4	 of	 the	 IAS	
Regulation.
In	 our	 opinion	 the	 Group	 financial	 statements	 comply	 with	 IFRSs	 as	 issued	 by	 the	 IASB.
Opinion on other matter prescribed by the Companies Act 2006
In	 our	 opinion	 the	 information	 given	 in	 the	 Directors’	 Report	 for	 the	 financial	 year	 for	 which	 the	 Group	 financial	 statements	
are	 prepared	 is	 consistent	 with	 the	 Group	 financial	 statements.
Matters on which we are required to report by exception
We	 have	 nothing	 to	 report	 in	 respect	 of	 the	 following:
Under	 the	 Companies	 Act	 2006	 we	 are	 required	 to	 report	 to	 you	 if,	 in	 our	 opinion:
● l certain	 disclosures	 of	 directors’	 remuneration	 specified	 by	 law	 are	 not	 made;	 or
● l we	 have	 not	 received	 all	 the	 information	 and	 explanations	 we	 require	 for	 our	 audit.
Other matter
We	 have	 reported	 separately	 on	 the	 parent	 company	 financial	 statements	 of	 Vero	 Software	 Plc	 for	 the	 year	 ended	
31	 December	 2009.
Joanne	 Herniman
Senior Statutory Auditor
For	 and	 on	 behalf	 of	 Moore	 Stephens	 LLP,	 Statutory Auditor
150	 Aldersgate	 Street
London
EC1A	 4AB
7	 May	 2010
17
Independent	 Auditors’	 Report	 to	 the	 Shareholders	 	
of	 Vero	 Software	 Plc V e r o S o f t w a r e P l c
18
17872	 19/05/2010	 Proof	8
	 Year ended 31 December
	 Ordinary Exceptional Total	 Ordinary	 Exceptional	 Total
	 	 2009 2009 2009	 2008	 2008	 2008
	 Note	 £’000 £’000 £’000	 £’000	 £’000	 £’000
Revenue	 3	 12,807 – 12,807	 13,913	 –	 13,913
Cost	 of	 sales	 	 (659) – (659)	 (833)	 –	 (833)
Gross profit	 	 12,148 – 12,148	 13,080	 –	 13,080
Selling	 expenses	 	 (5,513) (46) (5,559)	 (6,345)	 (343)	 (6,688)
Administrative	 expenses	 	 (2,742) (26) (2,768)	 (2,501)	 (93)	 (2,594)
Product	 development	 (1,841) – (1,841)	 (2,047)	 (9)	 (2,056)
Net	 other	 operating	 income	 	 – – –	 60	 –	 60
Earnings before interest, tax,
 depreciation and amortisation (EBITDA)	 	 2,052 (72) 1,980	 2,247	 (445)	 1,802
Depreciation	 and	 impairment	 10	 (208) (129) (337)	 (205)	 –	 (205)
Amortisation	 and	 impairment	 11,12 (815) – (815)	 (509)	 –	 (509)
Operating profit/(loss)	 1,029 (201) 828	 1,533	 (445)	 1,088
Finance	 income	 	 7 – 7	 34	 –	 34
Finance	 expense	 5	 (223) – (223)	 (198)	 –	 (198)
Profit before taxation	 6	 813 (201) 612	 1,369	 (445)	 924
Taxation	 credit	 /(charge)	 8	 132 – 132	 (75)	 –	 (75)
Profit after taxation	 	 945 (201) 744	 1,294	 (445)	 849
Earnings	 per	 share	 –	 pence	 (basic)	 9	 	 2.00	 	 	 2.28
Earnings	 per	 share	 –	 pence	 (fully	 diluted)	 9	 	 1.94	 	 	 2.27
Consolidated	 statement	 of	 comprehensive	 income
 Year ended 31 December
	 2009	 2008
	 £’000	 £’000
Profit	 for	 the	 year	 744	 849
Comprehensive	 income	 for	 the	 year:	 	
Currency	 translations	 (52)	 205
Exchange	 losses	 on	 net	 investment	 in	 foreign	 operations	 (121)	 –
Total	 comprehensive	 income	 for	 the	 year	 attributable	 to	 shareholders	 571	 1,054
18
Consolidated	 statement	 of	 financial	 performance A n n u a l R e p o r t a n d A c c o u n t s 2 0 0 9
19
17872	 19/05/2010	 Proof	8
	 As	 at	 31	 December
	 	 2009	 2008
	 Note	 £’000	 £’000
Assets
Non-current assets
Property,	 plant	 and	 equipment	 10	 347	 854
Goodwill	 11	 3,024	 3,066
Other	 intangible	 assets	 12	 4,269	 3,837
Trade	 and	 other	 receivables	 13	 319	 –
Held	 for	 sale	 14	 224	 –
Investments	 15	 –	 1
Deferred	 tax	 16	 300	 239
	 	 8,483	 7,997
Current assets
Inventories	 	 28	 14
Trade	 and	 other	 receivables	 17	 6,418	 7,904
Current	 tax	 	 86	 105
Other	 financial	 assets	 18	 3	 –
Cash	 and	 cash	 equivalents	 19	 2,323	 1,632
	 	 8,858	 9,655
Total assets	 	 17,341	 17,652
Liabilities
Non-current liabilities
Bank	 loans	 and	 borrowings	 20	 2,572	 1,119
Other	 creditors	 	 14	 13
Deferred	 tax	 16	 733	 637
Provisions	 for	 liabilities	 21	 613	 638
	 	 3,932	 2,407
Current liabilities
Trade	 and	 other	 payables	 	 763	 846
Current	 taxation	 	 88	 368
Bank	 loans	 and	 borrowings	 22	 1,929	 3,374
Deferred	 revenue	 	 1,665	 1,701
Other	 financial	 liabilities	 29	 –	 122
Other	 creditors	 23	 1,751	 2,192
	 	 6,196	 8,603
Total liabilities	 	 10,128	 11,010
Equity
Issued	 share	 capital	 24	 186	 186
Share	 premium	 	 1,860	 1,860
Other	 reserves	 26	 (18)	 26
Retained	 earnings	 	 5,185	 4,570
Total equity	 7,213	 6,642
Total equity and liabilities	 	 17,341	 17,652
Approved	 and	 authorised	 for	 issue	 by	 the	 Board	 of	 Directors	 on	 7	 May	 2010	 and	 signed	 on	 its	 behalf	 by
Julie Randall
Finance Director
19
Consolidated	 statement	 of	 financial	 position V e r o S o f t w a r e P l c
20
17872	 19/05/2010	 Proof	8
   
  Share Share Translation Other Retained Total 
  capital premium reserve reserves earnings equity
	 	 £’000	 £’000	 £’000	 £’000	 £’000	 £’000
As	 at	 1	 January	 2008	 	 186	 5,860	 (191)	 12	 (279)	 5,588
Transfer	 of	 share	 premium	 on
capital	 restructuring	 	 –	 (4,000)	 –	 –	 4,000	 –
Total	 comprehensive	 income	 	 –	 –	 203	 2	 849	 1,054
As	 at	 31	 December	 2008	 	 186	 1,860	 12	 14	 4,570	 6,642
Transfer	 (note	 26)	 	 – – – 8 (8) –
Total	 comprehensive	 income	 	 – – (51) (1) 623 571
As	 at	 31	 December	 2009  186 1,860 (39) 21 5,185 7,213
20
Consolidated	 statement	 of	 changes	 in	 equity A n n u a l R e p o r t a n d A c c o u n t s 2 0 0 9
21
17872	 19/05/2010	 Proof	8
	 Year	 ended	 31	 December
	 	 2009	 2008
	 Note	 £’000	 £’000
Cash flows from operating activities
Cash	 generated	 from	 operations	 30	 1,669	 1,916
Interest	 paid	 	 	 (159)	 (213)
Taxes	 paid	 	 (60) 	 (39)
Net	 cash	 from	 operating	 activities	 	 1,450	 1,664
Cash flows from investing activities
Payment	 of	 deferred	 consideration	 	 (7)	 (587)
Purchase	 of	 property,	 plant	 and	 equipment	 	 (54)	 (173)
Proceeds	 from	 sale	 of	 property,	 plant	 and	 equipment	 	 13	 247
Purchases	 of	 intangible	 assets	 	 (7)	 (197)
Proceeds	 from	 sale	 of	 investment	 	 4	 –
Capitalised	 product	 development	 	 (1,027)	 (1,008)
Sale	 of	 financial	 asset	 	 –	 118
Interest	 received	 	 7	 34
Net	 cash	 used	 in	 investing	 activities	 (1,071)	 (1,566)
Cash flows from financing activities
Payments	 of	 finance	 lease	 liabilities	 	 (97)	 (81)
Loans	 drawn	 down	 2,275	 524
Loans	 repaid	 	 (1,721)	 (613)
Net	 cash	 from/(used)	 in	 financing	 activities	 	 457	 (170)
Net	 increase/(decrease)	 in	 cash	 and	 cash	 equivalents	 	 836	 (72)
Cash	 and	 cash	 equivalents	 at	 beginning	 of	 the	 year	 	 92	 (16)
Exchange	 (losses)/gains	 on	 cash	 and	 cash	 equivalents	 	 (55)	 180
Cash	 and	 cash	 equivalents	 at	 end	 of	 the	 year	 19	 873	 92
21
Consolidated	 cash	 flow	 statement V e r o S o f t w a r e P l c
22
17872	 19/05/2010	 Proof	8
22
General information
Vero	 Software	 plc	 is	 a	 company	 incorporated	 and	 domiciled	 in	 the	 United	 Kingdom.	 The	 address	 of	 the	 registered	 office	
is	 given	 on	 page	 10.	 The	 nature	 of	 the	 Group’s	 operations	 and	 its	 principal	 activities	 are	 set	 out	 in	 the	 business	 review	 on	
pages	 11	 to	 16.
The	 financial	 statements	 are	 presented	 in	 pounds	 sterling,	 rounded	 to	 the	 nearest	 thousand,	 as	 that	 is	 the	 currency	 of	 the	
primary	 economic	 environment	 in	 which	 the	 Group	 operates.
	
The	 Group	 financial	 statements	 consolidate	 those	 of	 the	 Company	 and	 its	 subsidiaries	 (together	 referred	 to	 as	 the	 ‘Group’).	
Foreign	 operations	 are	 included	 in	 accordance	 with	 the	 policies	 set	 out	 below.
1.  Accounting policies
Basis of preparation
The	 consolidated	 financial	 statements	 of	 the	 Group	 have	 been	 prepared	 on	 the	 historic	 cost	 basis	 as	 modified	 by	 the	
revaluation	 of	 certain	 financial	 assets	 and	 liabilities,	 in	 accordance	 with	 International	 Financial	 Reporting	 Standards	
(“IFRS”)	 as	 adopted	 by	 the	 European	 Union	 and	 the	 Companies	 Act	 2006	 and	 therefore	 comply	 with	 Article	 4	 of	 the	
EU	 IAS	 Regulation.	
The	 financial	 statements	 have	 been	 prepared	 on	 the	 going	 concern	 basis.
The	 principal	 accounting	 policies	 of	 the	 Group	 are	 set	 out	 below:
 Changes In accounting policy and disclosures
The	 Group	 has	 adopted	 all	 new	 and	 revised	 Standards	 and	 Interpretations	 issued	 by	 the	 International	 Accounting	
Standards	 Board	 (IASB)	 and	 the	 International	 Financial	 Reporting	 Interpretations	 Committee	 (IFRIC)	 of	 the	 IASB	 that	
are	 relevant	 to	 the	 Group’s	 operations	 and	 effective	 for	 accounting	 periods	 beginning	 on	 1	 January	 2009.
These	 financial	 statements	 have	 been	 prepared	 in	 accordance	 with	 the	 revised	 IAS	 1	 Presentation	 of	 Financial	 Statements	
which	 is	 effective	 for	 accounting	 periods	 beginning	 on	 1	 January	 2009.	 The	 revised	 IAS	 1	 has	 resulted	 in	 a	 change	 to	
disclosures	 in	 the	 financial	 statements,	 as	 well	 as	 changing	 the	 presentation	 of	 performance.	 The	 Group	 has	 chosen	 to	
present	 a	 separate	 statement	 of	 financial	 performance	 and	 comprehensive	 income	 and	 now	 reports	 a	 statement	 of	 financial	
position	 rather	 than	 a	 balance	 sheet.
Revisions	 to	 IAS	 20	 Accounting	 for	 Government	 Grants	 and	 Disclosure	 of	 Government	 Assistance	 require	 the	 benefit	
of	 a	 government	 loan	 at	 a	 below-market	 rate	 of	 interest	 to	 be	 treated	 as	 a	 government	 grant.	 The	 benefit	 of	 the	
below-market	 rate	 of	 interest	 is	 measured	 as	 the	 difference	 between	 the	 fair	 value	 of	 the	 loan	 at	 the	 initial	 recognition	
date	 and	 the	 proceeds	 received.	 The	 revisions	 to	 the	 Standard	 apply	 prospectively	 to	 government	 loans	 received	 on	
or	 after	 1	 January	 2009.	 The	 Group	 has	 not	 received	 any	 new	 loans	 since	 this	 date	 at	 below-market	 rates	 of	 interest,	
which	 remain	 outstanding	 at	 the	 year	 end.	 The	 revisions	 to	 the	 Standard	 have	 therefore	 not	 impact	 the	 statements	 for	
the	 year	 ended	 31	 December	 2009.	 The	 revisions	 to	 the	 Standard	 are	 however	 expected	 to	 impact	 future	 periods.
Revisions	 to	 IFRS	 7	 Financial	 Instrument:	 Disclosures,	 requires	 an	 analysis	 of	 all	 financial	 instruments	 measured	
subsequent	 to	 initial	 recognition	 at	 fair	 value,	 grouped	 into	 a	 hierarchy	 of	 levels	 1	 to	 3,	 based	 on	 the	 degree	 to	 which	
the	 fair	 value	 has	 been	 determined	 using	 observable	 inputs.
IFRS	 8	 Operating	 Segments	 is	 a	 disclosure	 standard	 that	 has	 been	 adopted	 by	 the	 Group	 for	 the	 first	 time	 for	 the	
year	 ended	 31	 December	 2009.	 No	 changes	 were	 required	 for	 the	 year	 ended	 31	 December	 2008.
At	 the	 date	 of	 the	 statement	 of	 financial	 position	 the	 following	 Standards	 and	 Interpretations,	 which	 are	 applicable	 to	
the	 Group,	 were	 in	 issue	 but	 not	 yet	 effective:
IFRS	 9	 Financial	 Instruments	 deals	 with	 the	 classification	 and	 measurement	 of	 financial	 assets	 when	 determining	
whether	 financial	 assets	 should	 be	 recorded	 at	 amortised	 cost	 or	 at	 fair	 value,	 and	 the	 associated	 accounting	
treatment	 of	 embedded	 derivatives	 within	 financial	 assets.	 The	 standard	 is	 applicable	 for	 accounting	 periods	
beginning	 on	 or	 after	 1	 January	 2013	 but	 early	 adoption	 is	 allowed.	 The	 directors	 do	 not	 anticipate	 that	 the	 adoption	
of	 this	 Standard	 will	 have	 a	 material	 impact	 on	 the	 financial	 statements.
Notes	 to	 the	 financial	 statements A n n u a l R e p o r t a n d A c c o u n t s 2 0 0 9
23
17872	 19/05/2010	 Proof	8
1.  Accounting policies – continued
The	 remaining	 new	 standards,	 interpretations	 and	 amendments,	 in	 issue	 but	 not	 yet	 effective,	 which	 have	 not	 been	 applied	
in	 these	 financial	 statements,	 are	 not	 expected	 to	 have	 a	 material	 effect	 on	 the	 Group’s	 future	 financial	 statements.
 Consolidation
The	 consolidated	 financial	 statements	 for	 the	 year	 ended	 31	 December	 2009	 incorporate	 the	 financial	 information	
of	 the	 Company	 and	 entities	 controlled	 by	 the	 Company	 (its	 subsidiaries	 as	 set	 out	 in	 note	 15).	 Control	 is	 achieved	
where	 the	 Group	 has	 the	 power	 to	 govern	 the	 financial	 and	 operating	 policies	 of	 an	 investee	 entity	 so	 as	 to	 obtain	
benefits	 from	 its	 activities.
Subsidiaries	 are	 consolidated	 from	 the	 date	 of	 their	 acquisition,	 being	 the	 date	 on	 which	 the	 Group	 obtains	 control.
All	 business	 combinations	 are	 accounted	 for	 using	 the	 purchase	 method	 of	 accounting.	 The	 cost	 of	 the	 business	
combination	 is	 measured	 as	 the	 aggregate	 of	 the	 fair	 values	 of	 assets	 given	 less	 liabilities	 incurred	 or	 assumed.	
Consideration	 includes	 any	 deferred	 consideration.
All	 intra-group	 transactions,	 balances,	 income	 and	 expenditure	 are	 eliminated	 on	 consolidation.
 Accounting estimates and judgements
In	 the	 process	 of	 applying	 the	 Group’s	 accounting	 policies,	 management	 has	 made	 judgments,	 estimates	 and	
assumptions	 that	 affect	 the	 reported	 amount	 of	 assets	 and	 liabilities,	 income	 and	 expenses.	 These	 judgments	 involve	
assumptions	 or	 estimates	 in	 respect	 of	 future	 events,	 which	 can	 vary	 from	 what	 is	 anticipated	 as	 discussed	 below.
 a)	 Impairment	 of	 non-financial	 assets
The	 Group	 assesses	 whether	 there	 are	 any	 indicators	 of	 impairment	 for	 all	 non-financial	 assets	 at	 each	 reporting	 date.	
Goodwill	 is	 tested	 for	 impairment	 annually	 and	 at	 other	 times	 when	 such	 indicators	 exist.	 Other	 non-financial	 assets	
are	 tested	 for	 impairment	 when	 there	 are	 indicators	 that	 the	 carrying	 amounts	 may	 not	 be	 recoverable.
When	 value	 in	 use	 calculations	 are	 undertaken,	 management	 must	 estimate	 the	 expected	 future	 cash	 flows	 from	 the	
asset	 or	 cash	 generating	 unit	 and	 choose	 a	 suitable	 discount	 rate	 in	 order	 to	 calculate	 the	 present	 value	 of	 those	
cash	 flows.	 Further	 details	 are	 given	 in	 note	 11.
	 b)	 Impairment	 and	 recoverability	 of	 trade	 receivables
	 In	 assessing	 the	 recoverability	 of	 trade	 receivables,	 management	 take	 account	 of	 all	 relevant	 information	 available	 as	
discussed	 in	 note	 17.
 Revenue recognition
Revenue	 represents	 the	 value	 of	 sales	 of	 software	 and	 related	 services	 to	 third	 parties,	 exclusive	 of	 value	 added	
tax	 or	 equivalent.	 Software	 licences	 are	 recognised	 on	 delivery	 of	 the	 software	 licence.	 Maintenance	 renewals	 are	
recognised	 rateably	 over	 the	 period	 of	 the	 maintenance	 contract.	
 Cost of sales
Cost	 of	 sales	 represents	 the	 cost	 of	 licence	 fees	 in	 respect	 of	 third	 party	 software	 licences,	 software	 media	 costs	 and	
related	 hardware.
 Employee benefits
The	 Group	 operates	 a	 defined	 contribution	 pension	 scheme	 for	 employees	 based	 in	 the	 United	 Kingdom.	 The	
scheme	 is	 funded	 by	 the	 payment	 of	 contributions	 to	 an	 independently	 administered	 fund.	 The	 pension	 contributions	
are	 charged	 to	 the	 statement	 of	 financial	 performance	 when	 incurred.
The	 Group’s	 Italian	 and	 Japanese	 subsidiaries	 operate	 a	 staff	 leaving	 indemnity	 fund	 which	 becomes	 payable	 when	
staff	 leave	 the	 Company	 or	 earlier	 upon	 approved	 employee	 application.
Accruals	 are	 made	 for	 holiday	 pay,	 based	 on	 a	 calculation	 of	 the	 number	 of	 days	 holiday	 earned	 during	 the	 year,	 but	
not	 yet	 taken.
23 V e r o S o f t w a r e P l c
24
17872	 19/05/2010	 Proof	8
1.  Accounting policies – continued
 Share based payments
Charges	 are	 made	 in	 the	 statement	 of	 financial	 performance	 to	 spread	 the	 fair	 value	 of	 share	 options	 issued	 since	
November	 2002	 over	 the	 vesting	 period	 of	 those	 options.
 Government grants
Revenue	 grants	 are	 recognised	 in	 the	 statement	 of	 financial	 performance	 as	 other	 income	 and	 matched	 against	 the	
project’s	 related	 expenditure,	 provided	 that	 the	 Group	 has	 met	 the	 conditions	 of	 the	 grant	 and	 there	 is	 reasonable	
assurance	 that	 it	 will	 be	 received.
 Intangible fixed assets — research and development
Expenditure	 on	 research	 activities,	 undertaken	 with	 the	 prospect	 of	 gaining	 new	 scientific	 or	 technical	 knowledge	
and	 understanding,	 is	 recognised	 in	 the	 statement	 of	 financial	 performance	 as	 an	 expense	 as	 incurred.	 Development	
costs	 incurred	 after	 the	 point	 at	 which	 the	 commercial	 and	 technical	 feasibility	 of	 the	 product	 has	 been	 proven,	 and	
the	 decision	 to	 complete	 the	 development	 has	 been	 taken	 and	 the	 resources	 made	 available,	 are	 capitalised.	 The	
expenditure	 capitalised	 includes	 the	 cost	 of	 direct	 labour	 and	 an	 appropriate	 proportion	 of	 overheads.	 Capitalised	
development	 expenditure	 is	 stated	 at	 cost	 less	 accumulated	 amortisation	 and	 impairment	 losses.	 Development	
expenditure	 has	 an	 estimated	 useful	 life	 of	 6	 years	 and	 is	 amortised	 on	 a	 straight-line	 basis.
 Intangible assets — other
Software	 acquired	 from	 third	 parties,	 licences	 and	 trade	 marks,	 are	 included	 as	 intangible	 fixed	 assets	 at	 cost	 less	
amortisation	 and	 are	 amortised	 over	 3	 to	 10	 years.	
In	 accordance	 with	 IFRS	 3	 “Business	 Combinations”	 goodwill	 arising	 on	 the	 acquisition	 of	 subsidiaries	 is	 capitalised	
and	 included	 in	 intangible	 assets.	 IFRS	 3	 also	 requires	 the	 identification	 of	 other	 intangible	 assets	 acquired.	 Although	
the	 techniques	 used	 to	 value	 other	 intangible	 assets	 are	 in	 line	 with	 internationally	 used	 models,	 they	 do	 require	 the	
use	 of	 estimates,	 which	 may	 differ	 from	 actual	 outcomes.
The	 estimated	 useful	 lives	 of	 the	 acquired	 intangible	 assets	 are	 as	 follows:
Intellectual	 property	 	 6	 years
In	 process	 research	 and	 development	 	 6	 years
The	 carrying	 value	 is	 reviewed	 for	 impairment	 when	 events	 or	 changes	 in	 circumstances	 indicate	 that	 it	 may	 be	
impaired.	 If	 any	 such	 indication	 exists,	 the	 recoverable	 amount	 of	 the	 asset	 is	 estimated	 in	 order	 to	 determine	 the	
extent	 of	 the	 impairment	 loss.
 Impairment of goodwill
The	 determination	 of	 whether	 or	 not	 goodwill	 has	 been	 impaired	 requires	 an	 estimate	 to	 be	 made	 of	 the	 value	 in	 use	
of	 the	 cash	 generating	 units	 to	 which	 goodwill	 has	 been	 allocated.	 The	 value	 in	 use	 estimation	 includes	 estimates	
about	 the	 future	 financial	 performance	 of	 the	 cash	 generating	 units,	 including	 management’s	 estimates	 of	 long	 term	
operating	 margins	 and	 long-term	 growth	 rates.	 The	 carrying	 amount	 of	 goodwill	 and	 the	 key	 assumptions	 used	 in	 the	
calculation	 of	 value	 in	 use	 of	 the	 cash	 generating	 units	 to	 which	 goodwill	 is	 allocated	 is	 disclosed	 in	 note	 11.
 Property, plant and equipment
Assets	 are	 stated	 at	 cost	 less	 accumulated	 depreciation.	 Depreciation	 is	 provided	 to	 write	 off	 the	 cost	 of	 assets	 less	
their	 estimated	 residual	 value	 on	 a	 straight-line	 basis	 over	 their	 estimated	 useful	 economic	 lives	 as	 follows:
	 Buildings	 2%	 to	 3%
	 Motor	 vehicles	 25%
	 Plant	 and	 equipment	 10%	 to	 25%
	 Leasehold	 improvements	 over	 the	 remaining	 life	 of	 the	 lease
 Inventories
Inventories	 of	 CDs,	 manuals	 and	 packaging	 are	 included	 at	 the	 lower	 of	 cost	 and	 net	 realisable	 value,	 after	 making	
due	 allowance	 for	 obsolete	 and	 slow	 moving	 stock.
24
Notes	 to	 the	 financial	 statements
	 A n n u a l R e p o r t a n d A c c o u n t s 2 0 0 9
25
17872	 19/05/2010	 Proof	8
1.  Accounting policies – continued
The	 cost	 of	 inventories	 comprises	 the	 purchase	 price,	 carriage	 and	 other	 costs	 directly	 attributable	 to	 the	 acquisition	 of	
goods,	 less	 any	 trade	 discounts	 deductible.
 Cash and cash equivalents
Cash	 and	 cash	 equivalents	 comprise	 cash	 balances	 and	 short-term	 (with	 an	 original	 maturity	 of	 less	 than	 three	 months)	
deposits.	 Bank	 overdrafts	 that	 are	 repayable	 on	 demand	 form	 part	 of	 cash	 and	 cash	 equivalents	 for	 the	 purpose	 of	 the	
cash	 flow	 statement.
 Trade receivables
 Trade	 receivables	 are	 initially	 recognised	 at	 fair	 value	 and	 subsequently	 at	 amortised	 cost.	 A	 provision	 for	 impairment	 of	
trade	 receivables	 is	 established	 when	 there	 is	 objective	 evidence	 that	 the	 Group	 will	 not	 be	 able	 to	 collect	 all	 amounts	
due	 according	 to	 the	 agreed	 terms.	 The	 creation	 and	 release	 of	 provision	 for	 impaired	 receivables	 has	 been	 included	 in	
‘Selling	 expenses’	 in	 the	 Statement	 of	 financial	 performance.
 Taxation
Income	 tax	 on	 the	 profit	 or	 loss	 for	 the	 periods	 presented	 comprises	 current	 and	 deferred	 tax.	 Income	 tax	 is	
recognised	 in	 the	 statement	 of	 financial	 performance	 except	 to	 the	 extent	 that	 it	 relates	 to	 items	 recognised	 directly	 in	
equity,	 in	 which	 case	 it	 is	 recognised	 in	 other	 comprehensive	 income.
Current	 tax	 is	 the	 expected	 tax	 payable	 on	 the	 taxable	 income	 for	 the	 year,	 using	 tax	 rates	 enacted	 or	 substantively	
enacted	 at	 the	 reporting	 date,	 and	 any	 adjustment	 to	 tax	 payable	 in	 respect	 of	 previous	 periods.
Deferred	 tax	 is	 recognised	 in	 respect	 of	 all	 temporary	 differences	 between	 the	 carrying	 amounts	 of	 assets	 and	 liabilities	
for	 financial	 reporting	 purposes	 and	 the	 amounts	 used	 for	 taxation	 purposes.	 The	 amount	 of	 deferred	 tax	 provided	 is	
based	 on	 the	 expected	 realisation	 or	 settlement	 of	 the	 carrying	 amount	 of	 assets	 or	 liabilities.	 Deferred	 tax	 is	 measured	
at	 tax	 rates	 that	 are	 expected	 to	 be	 applied	 to	 the	 temporary	 differences	 when	 they	 reverse,	 based	 on	 laws	 that	 have	
been	 enacted	 or	 substantively	 enacted	 by	 the	 reporting	 date.
A	 deferred	 tax	 asset	 is	 recognised	 only	 to	 the	 extent	 that	 it	 is	 probable	 that	 future	 taxable	 profits	 will	 be	 available	
against	 which	 the	 asset	 can	 be	 utilised.	 Deferred	 tax	 assets	 are	 reduced	 to	 the	 extent	 that	 it	 is	 no	 longer	 probable	 that	
the	 related	 tax	 benefit	 will	 be	 realised.
 Exceptional items
The	 directors	 consider	 the	 costs	 associated	 with	 the	 restructuring	 of	 the	 Group	 to	 be	 exceptional.	 Such	 costs,	 together	
with	 associated	 redundancy	 costs	 and	 provisions	 and	 impairments	 in	 respect	 of	 property	 no	 longer	 required	 by	 the	
Group,	 have	 been	 disclosed	 as	 exceptional	 within	 a	 separate	 column	 in	 the	 statement	 of	 financial	 performance.
 Leasing
Leases	 are	 classified	 as	 finance	 leases	 whenever	 the	 terms	 of	 the	 lease	 transfer	 substantially	 all	 the	 risks	 and	 rewards	
of	 ownership	 to	 the	 Group.	 All	 other	 leases	 are	 classified	 as	 operating	 leases.
Property,	 plant	 and	 equipment	 held	 under	 finance	 lease	 is	 capitalised	 in	 the	 statement	 of	 financial	 position	 at	 the	 lower	
of	 cost	 or	 present	 value	 of	 the	 minimum	 lease	 payments	 and	 is	 depreciated	 over	 its	 useful	 life.	 The	 capital	 elements	 of	
future	 obligations	 under	 leases	 are	 included	 as	 liabilities.
Rentals	 payable	 under	 operating	 leases	 are	 charged	 to	 the	 statement	 of	 financial	 performance	 on	 a	 straight-line	 basis	
over	 the	 term	 of	 the	 lease.	 Benefits	 received	 and	 receivable	 as	 an	 incentive	 to	 enter	 into	 an	 operating	 lease	 are	 also	
spread	 on	 a	 straight-line	 basis	 over	 the	 lease	 term.	
 Financial instruments
Treasury	 activities	 are	 managed	 under	 policies	 and	 procedures	 approved	 and	 monitored	 by	 the	 Board.	 These	 are	
designed	 to	 reduce	 the	 financial	 risk	 faced	 by	 the	 Group,	 which	 relate	 primarily	 to	 credit	 risk,	 foreign	 currency	 risk,	
liquidity	 risk	 and	 interest	 rate	 risk.	 The	 Group	 does	 not	 undertake	 any	 trading	 or	 speculative	 activity	 in	 financial	
instruments.
25 V e r o S o f t w a r e P l c
26
17872	 19/05/2010	 Proof	8
1.  Accounting policies – continued
 Foreign currency
Transactions	 in	 foreign	 currency	 are	 included	 in	 the	 accounts	 of	 individual	 companies	 at	 the	 rate	 of	 exchange	 ruling	
at	 the	 date	 of	 the	 transaction.	 Monetary	 assets	 and	 liabilities	 expressed	 in	 foreign	 currency	 are	 translated	 at	 the	 rates	
ruling	 at	 the	 financial	 year	 end	 date	 and	 any	 differences	 on	 translation	 are	 dealt	 with	 in	 the	 statement	 of	 financial	
performance.
Results	 are	 translated	 into	 sterling	 at	 the	 weighted	 average	 rates	 for	 the	 year,	 which	 is	 effected	 by	 translating	 each	
overseas	 subsidiary’s	 monthly	 result	 at	 exchange	 rates	 applicable	 to	 each	 of	 the	 respective	 months.	 Assets	 and	
liabilities	 denominated	 in	 foreign	 currencies	 at	 the	 reporting	 date	 are	 translated	 into	 sterling	 at	 the	 foreign	 exchange	
rate	 ruling	 at	 that	 date.	 Differences	 on	 exchange	 resulting	 from	 the	 translation	 of	 overseas	 assets	 and	 liabilities	 are	
recognised	 directly	 as	 a	 component	 of	 other	 comprehensive	 income.	 Such	 exchange	 differences	 are	 recognised	 as	
income	 or	 expense	 in	 the	 period	 in	 which	 the	 operation	 is	 disposed	 of.	 Cumulative	 differences	 were	 set	 to	 zero	 	
at	 the	 date	 of	 transition	 to	 IFRS.
The	 closing	 rates	 of	 exchange	 that	 have	 been	 applied	 at	 the	 reporting	 date	 and	 the	 average	 rates	 of	 exchange	 during	
the	 period	 are	 shown	 below:
	 to	 £1
	 2009	 2008
Closing rate
Euro	 1.13 1.05	
US	 $	 1.62 1.46
Yen	 151 133
Average rate
Euro	 1.12 1.28
US	 $	 1.56 1.89
Yen	 146 198
2.  Exceptional items
 Year	 ended	 31	 December
	 2009 2008
 £’000 £’000
Reorganisation	 and	 restructuring	 46	 445
Provision	 for	 onerous	 lease	 26 –
Depreciation	 –	 impairment	 of	 building	 	 129 –
	 	
	 201 445
	 	
3.  Revenue
Analysis	 of	 the	 Group’s	 revenue	 is	 as	 follows:
 Year	 ended	 31	 December
	 2009 2008
 £’000 £’000
Software	 and	 licence	 fees	 7,188	 8,723
Related	 services	 	 5,619 5,190
	 	
	 12,807 13,913
	 	
26
Notes	 to	 the	 financial	 statements
	 A n n u a l R e p o r t a n d A c c o u n t s 2 0 0 9
27
17872	 19/05/2010	 Proof	8
4.  Segmental reporting
The	 Group	 operates	 in	 one	 business	 segment	 –	 the	 development,	 marketing	 and	 distribution	 of	 computer	 aided	
design	 and	 manufacturing	 software	 and	 related	 services.
The	 following	 table	 analyses	 revenue	 by	 geographical	 area,	 based	 on	 customer	 location.
 Year	 ended	 31	 December
	 2009 2008
 £’000 £’000
Europe	 7,846 8,908
North	 America	 2,004 1,619
Asia	 2,638 3,059
Rest	 of	 the	 World	 319 327
	 	
	 12,807 13,913
	 	
The	 Board	 of	 directors	 reviews	 the	 Group’s	 internal	 reporting	 in	 order	 to	 assess	 performance	 and	 allocated	 resources.	
Operating	 segments	 have	 been	 identified	 as	 subsidiaries	 and	 branches	 based	 on	 these	 reports.
	 Year	 ended	 31	 December	 2009	
	 	 	 United	 	 North
	 	 Italy	 Kingdom	 America	 Japan	 China	 France	Total
	 	 £’000	 £’000	 £’000	 £’000	 £’000	 £’000	 £’000
External	 sales	 	 3,479	 4,555	 1,949	 2,050	 193	 581	 12,807
Inter-segment	 revenue	 	 –	 1,698	 69	 –	 –	 –	 1,767
	 	 	 	 	 	 	 	
	 	 3,479	 6,253	 2,018	 2,050	 193	 581	 14,574
	 	 	 	 	 	 	 	
Eliminations	 	 	 	 	 	 	 	 (1,767)
	       
Consolidated	 revenue	 	 	 	 	 	 	 	 12,807
	       
Segment	 result	 —	 EBITDA	 	 288	 1,572	 436	 18	 (21)	 (198)	 2,095
	       
Assets
by	 location	 of	 assets	 	 2,737	 7,716	 2,952	 1,309	 30	 441	 15,185
Corporate	 items	 not	 allocated	 	 	 	 	 	 	 	 2,156
	       
Total	 assets	 	 	 	 	 	 	 	 17,341
	       
Liabilities
by	 location	 of	 liabilities	 	 3,463	 2,990	 361	 861	 16	 403	 8,094
Corporate	 items	 not	 allocated	 	 	 	 	 	 	 	 2,034
	       
Total	 liabilities	 	 	 	 	 	 	 	 10,128
	       
Depreciation	 	 61	 112	 24	 6	 1	 4	 208
Amortisation	 	 43	 614	 136	 –	 1	 1	 795
Impairment	 of	 property	 	 –	 129	 –	 –	 –	 –	 129
Impairment	 of	 goodwill	 	 –	 20	 –	 –	 –	 –	 20
Interest	 income	 	 (1)	 (5)	 –	 (1)	 –	 –	 (7)
Interest	 expense	 	 94	 74	 1	 3	 –	 –	 172
Taxation	 (credit)/charge	 	 (216)	 92	 –	 (8)	 –	 –	 (132)
Capital	 spend	 	 17	 30	 5	 –	 –	 9	 61
27 V e r o S o f t w a r e P l c
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17872	 19/05/2010	 Proof	8
4.  Segmental reporting –	 continued
	 Year	 ended	 31	 December	 2008	
	 	 	 United	 	 North
	 	 Italy	 Kingdom	 America	 Japan	 China	 France	Total
	 	 £’000	 £’000	 £’000	 £’000	 £’000	 £’000	 £’000
External	 sales	 	 4,182	 5,110	 1,697	 2,151	 241	 532	 13,913
Inter-segment	 revenue	 	 –	 941	 83	 –	 –	 –	 1,024
	 	 	 	 	 	 	 	
	 	 4,182	 6,051	 1,780	 2,151	 241	 532	 14,937
	 	 	 	 	 	 	 	
Eliminations	 	 	 	 	 	 	 	 (1,024)
	       
Consolidated	 revenue	 	 	 	 	 	 	 	 13,913
	       
Segment	 result	 —	 EBITDA	 	 348	 1,675	 (22)	 (88)	 5	 (217)	 1,701
	       
Assets
by	 location	 of	 assets	 	 3,523	 7,321	 3,003	 1,949	 62	 350	 16,208
Corporate	 items	 not	 allocated	 	 	 	 	 	 	 	 1,444
	       
Total	 assets	 	 	 	 	 	 	 	 17,652
	       
Liabilities
by	 location	 of	 liabilities	 	 4,808	 3,107	 378	 891	 30	 313	 9,527
Corporate	 items	 not	 allocated	 	 	 	 	 	 	 	 1,483
	       
Total	 liabilities	 	 	 	 	 	 	 	 11,010
	       
Depreciation	 	 56	 114	 20	 4	 7	 4	 205
Amortisation	 	 40	 420	 48	 –	 1	 –	 509
Interest	 income	 	 (7)	 (26)	 –	 (1)	 –	 –	 (34)
Interest	 expense	 	 51	 145	 2	 –	 –	 –	 198
Taxation	 charge	 	 7	 45	 –	 21	 2	 –	 75
Capital	 spend	 	 59	 264	 19	 23	 5	 –	 370
There	 was	 no	 expenditure	 of	 a	 non	 cash	 nature	 included	 in	 the	 corporate	 items	 not	 allocated	 (2008:	 nil).
A	 reconciliation	 of	 segment	 results	 to	 total	 EBITDA	 is	 provided	 as	 follows:
	 	 Year ended	 Year	 ended
	 31 December	 31	 December
	 	 2009	 2008
EBITDA	 for	 reportable	 segments	 	 2,095	 1,701
Corporate	 overheads	 	 (115)	 101
Total	 EBITDA	 	 1,980	 1,802
28
Notes	 to	 the	 financial	 statements
	 A n n u a l R e p o r t a n d A c c o u n t s 2 0 0 9
29
17872	 19/05/2010	 Proof	8
5. Finance expense
 Year	 ended	 31	 December
	 2009 2008
 £’000 £’000
Bank	 loans	 and	 overdraft	 interest	 169 188
Hire	 purchase	 interest	 and	 lease	 finance	 charges	 3 10
Finance	 raising	 costs	 51 –
	 	
	 223 198
	 	
6.  Profit before taxation
The	 profit	 before	 taxation	 is	 after	 charging/(crediting):
 Year	 ended	 31	 December
	 2009 2008
 £’000 £’000
Hire	 of	 assets	 including	 operating	 lease	 rentals
–	 plant	 and	 machinery	 329 201
–	 land	 and	 buildings	 473 402
Depreciation	 and	 amortisation	 1,003 714
Impairment	 loss	 on	 property	 129 –
Impairment	 of	 goodwill	 20 –
Product	 development	 	 1,841 2,056
(Profit)/loss	 on	 sale	 of	 property,	 plant	 and	 equipment	 (13) 12
Government	 grant	 income	 – (34)
Foreign	 exchange	 profit	 (35) (295)
Auditor’s	 remuneration	 –	 Moore	 Stephens
–	 in	 respect	 of	 audit	 services	 60 59
–	 in	 respect	 of	 taxation	 services	 – 5
Auditor’s	 remuneration	 in	 respect	 of	 audit	 services	 —	 other	 auditors	 30 17
Directors’	 remuneration	 507 619
Pension	 costs	 87 117
	 	
29 V e r o S o f t w a r e P l c
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17872	 19/05/2010	 Proof	8
7.  Employees and directors
The	 average	 number	 of	 persons	 employed	 by	 the	 Group	 during	 the	 year	 was:
 Year	 ended	 31	 December
	 2009 2008
 Number Number
Development	 48 51
Sales,	 marketing	 and	 technical	 support	 76 88
Administration	 33 29
	 	
	 157 168
	 	
a)	 Staff	 costs
 £’000 £’000
Wages	 and	 salaries	 5,630 6,281
Social	 security	 costs	 1,010 1,216
Pension	 cost	 for	 defined	 contribution	 plan	 87 117
	 	
	 6,727 7,614
	 	
b)	 Directors’	 emoluments
 £’000 £’000
Directors’	 remuneration	 comprised:
Emoluments	 482 587
Pension	 cost	 for	 defined	 contribution	 plan	 25 32
	 	
	 507 619
	 	
 £’000 £’000
Highest	 paid	 director:
Emoluments	 144 178
Pension	 contributions	 	 9 12
	 	
	 153 190
	 	
Contributions	 were	 made	 to	 a	 Group	 personal	 pension	 scheme	 on	 a	 defined	 contribution	 basis	 on	 behalf	 of	 	
4	 directors.	 The	 total	 of	 such	 contributions	 during	 the	 year	 ended	 31	 December	 2009	 was	 £25,000	 (2008:	 £32,000).
The	 directors	 are	 of	 the	 opinion	 that	 the	 key	 management	 of	 the	 Group	 comprises	 the	 Board	 of	 directors	 who	 have	
the	 authority	 and	 responsibility	 for	 planning,	 directing	 and	 controlling	 the	 activities	 of	 the	 Group.
30
Notes	 to	 the	 financial	 statements
	 A n n u a l R e p o r t a n d A c c o u n t s 2 0 0 9
31
17872	 19/05/2010	 Proof	8
8.  Taxation
 Year	 ended	 31	 December
	 2009 2008
 £’000 £’000
a)	 Current	 tax
UK	 corporation	 tax	 51 –
Foreign	 tax	 (credit)/charge	 (213) 52
	 	
Total	 current	 tax	 for	 the	 year	 (162) 52
	 	
Deferred	 tax
Origination	 and	 reversal	 of	 other	 temporary	 differences	 (105) (99)
Capitalisation	 of	 development	 113 122
Adjustment	 in	 respect	 of	 prior	 years	 22 –
	 	
Total	 deferred	 tax	 (note	 16)	 30 23
	 	
Tax	 on	 profit	 	 (132) 75
	 	
b)	 Reconciliation	 of	 current	 tax
Profit	 before	 tax	 612 924
	 	
Tax	 on	 profit	 at	 the	 standard	 rate	 of	 corporation	 tax	 in	 the	 UK	 of	 28%	 171 259
Expenses	 not	 deductible	 for	 tax	 purposes	 10 43
Research	 and	 development	 claim	 (352) (95)
Capital	 allowances	 more	 than	 depreciation	 23 (13)
Capitalisation	 of	 development	 costs	 (113) (174)
(Profits)/losses	 in	 foreign	 subsidiaries	 (13) 49
Foreign	 tax	 – 2
Foreign	 tax	 charged	 at	 higher	 rates	 than	 UK	 standard	 49 53
Other	 short	 term	 differences	 (13) 40
Deferred	 tax	 adjustment	 in	 respect	 of	 previous	 years	 4 (99)
Tax	 losses	 utilised/(carried	 forward)	 72 (13)
	 	
Current	 tax	 for	 the	 year	 (162) 52
	 	
31 V e r o S o f t w a r e P l c
32
17872	 19/05/2010	 Proof	8
9.  Earnings per share
Basic	 earnings	 per	 share	 is	 calculated	 by	 dividing	 net	 profit	 for	 the	 year	 attributable	 to	 ordinary	 equity	 holders	 of	 the	
parent	 company	 by	 the	 weighted	 average	 number	 of	 shares	 in	 issue	 during	 the	 year.
Diluted	 earnings	 per	 share	 is	 calculated	 by	 dividing	 the	 net	 profit	 attributable	 to	 ordinary	 equity	 holders	 of	 the	 parent	
company	 by	 the	 weighted	 average	 number	 of	 shares	 in	 issue	 during	 the	 year,	 plus	 the	 weighted	 average	 number	 of	
ordinary	 shares	 that	 would	 be	 issued	 on	 the	 conversion	 of	 all	 the	 dilutive	 potential	 ordinary	 shares	 into	 ordinary	 shares.
The	 following	 reflects	 the	 income	 and	 share	 data	 used	 in	 the	 calculations:
 12 months to 31 December 2009
	 Earnings  Shares EPS 
	 £’000 000 Pence
Basic	 earnings	 per	 share	 744 37,261 2.00
Number	 of	 shares	 for	 which	 options	 were	 outstanding	 – 2,600 –
Non	 dilutive	 options	 – (2,600) –
Number	 of	 shares	 for	 which	 warrants	 were	 outstanding	 – 1,232 –
Equivalent	 number	 of	 shares	 at	 fair	 value	 – (45) –
	 	 	
Fully	 diluted	 earnings	 per	 share	 744 38,448 1.94
	 	 	
 12	 months	 to	 31	 December	 2008
	 Earnings	 	 Shares	 EPS	
	 £’000	 000	 Pence
Basic	 earnings	 per	 share	 849	 37,261	 2.28
Number	 of	 shares	 for	 which	 options	 were	 outstanding	 –	 2,600	 –
Equivalent	 number	 of	 shares	 at	 fair	 value	 –	 (2,392)	 –
	 	 	
Fully	 diluted	 earnings	 per	 share	 849	 37,469	 2.27
	 	 	
32
Notes	 to	 the	 financial	 statements
	 A n n u a l R e p o r t a n d A c c o u n t s 2 0 0 9
33
17872	 19/05/2010	 Proof	8
10.  Property, plant and equipment
	 Land	 &	 	 Leasehold	 Plant	 and	 	 Motor
	 buildings	 improvements	 equipment	 vehicles	 Total	
	 £’000	 £’000	 £’000	 £’000	 £’000
Cost:
As	 at	 1	 January	 2009	 369	 431	 1,187	 369	 2,356
Exchange	 movements	 –	 (27)	 (60)	 (9)	 (96)
Additions	 –	 1	 31	 46	 78
Disposals	 –	 –	 (103)	 (45)	 (148)
Transfer	 to	 held	 for	 sale	 (369)	 –	 –	 –	 (369)
	 	 	 	 	
As at 31 December 2009 – 405 1,055 361 1,821
	 	 	 	 	
Accumulated	 depreciation:
As	 at	 1	 January	 2009	 11	 373	 925	 193	 1,502
Exchange	 movements	 –	 (22)	 (48)	 (5)	 (75)
Charge	 for	 the	 year	 5	 16	 104	 83	 208
Impairment	 charge	 129	 –	 –	 –	 129
Disposals	 –	 –	 (103)	 (42)	 (145)
Transfer	 to	 held	 for	 sale	 (145)	 –	 –	 –	 (145)
	 	 	 	 	
As at 31 December 2009 – 367 878 229 1,474
	 	 	 	 	
Net	 book	 value:
As	 at	 1	 January	 2009	 358	 58	 262	 176	 854
	 	 	 	 	
As at 31 December 2009 – 38 177 132 347
	 	 	 	 	
	 Land	 &	 	 Leasehold	 Plant	 and	 	 Motor
	 buildings	 improvements	 equipment	 vehicles	 Total	
	 £’000	 £’000	 £’000	 £’000	 £’000
Cost:
As	 at	 1	 January	 2008	 592	 349	 985	 373	 2,299
Exchange	 movements	 14	 90	 195	 29	 328
Additions	 –	 44	 96	 47	 187
Disposals	 (237)	 (52)	 (89)	 (80)	 (458)
	 	 	 	 	
As	 at	 31	 December	 2008	 369	 431	 1,187	 369	 2,356
	 	 	 	 	
Accumulated	 depreciation:
As	 at	 1	 January	 2008	 23	 328	 748	 157	 1,256
Exchange	 movements	 1	 84	 141	 14	 240
Charge	 for	 the	 year	 5	 13	 102	 85	 205
Disposals	 (18)	 (52)	 (66)	 (63)	 (199)
	 	 	 	 	
As	 at	 31	 December	 2008	 11	 373	 925	 193	 1,502
	 	 	 	 	
Net	 book	 value:
As	 at	 1	 January	 2008	 569	 21	 237	 216	 1,043
	 	 	 	 	
As	 at	 31	 December	 2008	 358	 58	 262	 176	 854
	 	 	 	 	
The	 net	 book	 value	 of	 motor	 vehicles	 includes	 £91,000	 (2008:	 £146,000)	 in	 respect	 of	 assets	 held	 under	 finance	
leases	 and	 hire	 purchase	 contracts.
33 V e r o S o f t w a r e P l c
34
17872	 19/05/2010	 Proof	8
11.  Goodwill 
	 As at   	 As at
 1 January   Exchange 31 December
	 2009 Adjustment Impairment movements 2009
	 £’000 £’000 £’000 £’000 £’000
Cost	 and	 net	 book	 value:
Group	 formation	 	 36 – – – 36
Vero	 Tecnologie	 118 – – – 118
EDI	 65 – (20) – 45
Machining	 Strategist	 103 – – – 103
Studio	 4	 219 – – – 219
Smirtware	 Inc	 740 – – – 740
Camtek	 Ltd	 1,531 – – – 1,531
Vero	 US	 Inc	 203 – – – 203
Camtek	 North	 America	 51 (18) – (4) 29
	 	 	 	 	
	 3,066 (18) (20) (4) 3,024
	 	 	 	 	
	 As	 at	 	 	 As	 at
	 1	 January	 	 Exchange	 31	 December
	 	 2008	 Adjustment	 movements	 2008
	 £’000	 £’000	 £’000	 £’000
Cost	 and	 net	 book	 value:
Group	 formation	 	 36	 –	 –	 36
Vero	 Tecnologie	 118	 –	 –	 118
EDI	 65	 –	 –	 65
Machining	 Strategist	 103	 –	 –	 103
Studio	 4	 219	 –	 –	 219
Smirtware	 Inc	 740	 –	 –	 740
Camtek	 Ltd	 1,531	 –	 –	 1,531
Visi	 US	 Inc	 203	 –	 –	 203
Camtek	 North	 America	 40	 (2)	 13	 51
	 	 	 	 	
	 3,055	 (2)	 13	 3,066
	 	 	 	 	
Goodwill	 acquired	 in	 a	 business	 combination	 is	 allocated	 to	 cash-generating	 units	 (CGU’s)	 which	 represent	 the	
Group’s	 key	 product	 lines.	 The	 Group	 conducts	 annual	 impairment	 tests	 on	 the	 carrying	 value	 of	 goodwill	 and	 its	
other	 intangible	 assets	 in	 accordance	 with	 IAS	 36	 “Impairment	 of	 assets”.	 An	 impairment	 test	 is	 a	 comparison	 of	 the	
carrying	 value	 of	 the	 assets	 of	 a	 business	 or	 cash	 generating	 unit	 (CGU)	 to	 their	 recoverable	 amount.	
All	 of	 the	 recoverable	 amounts	 were	 measured	 based	 on	 value	 in	 use.	 As	 a	 result	 of	 a	 decline	 in	 the	 EDI	 sales	 in	
2009,	 the	 goodwill	 on	 this	 product	 line	 has	 been	 impaired	 by	 £20,000	 (2008:	 nil).	 The	 impairment	 charge	 is	 included	
in	 “amortisation”	 in	 the	 statement	 of	 financial	 performance.	 All	 other	 CGUs	 had	 a	 recoverable	 amount	 measured	 in	
excess	 of	 their	 carrying	 value.
Key Assumptions
For	 the	 purposes	 of	 carrying	 out	 the	 impairment	 tests,	 management	 prepares	 cash	 flow	 forecasts	 based	 on	 the	 most	
recent	 approved	 financial	 budgets.	 In	 determining	 the	 recoverable	 amount	 of	 all	 CGUs,	 it	 is	 necessary	 to	 make	 a	
series	 of	 assumptions	 to	 estimate	 future	 cash	 flows.	 These	 assumptions	 have	 been	 made	 by	 management	 reflecting	
past	 experience	 and	 are	 consistent	 with	 relevant	 external	 sources	 of	 information.
Operating cash flows
The	 main	 assumptions	 within	 forecast	 operating	 cash	 flow	 include	 the	 achievement	 of	 future	 sales,	 prices	 and	
volumes,	 the	 cost	 structure	 of	 each	 CGU	 and	 the	 impact	 of	 foreign	 exchange	 rates.
34
Notes	 to	 the	 financial	 statements
	 A n n u a l R e p o r t a n d A c c o u n t s 2 0 0 9
35
17872	 19/05/2010	 Proof	8
11.  Goodwill –	 continued
Risk adjusted discount rates
Risk	 adjusted	 discount	 rates	 reflect	 the	 current	 market	 assessment	 of	 the	 risks	 specific	 to	 the	 CGU’s.	 The	 discount	
rate	 used	 was	 14%.
Growth rate
Future	 cash	 flows	 are	 based	 on	 a	 perpetuity	 growth	 rate	 of	 3%.	 Management	 consider	 that	 it	 is	 appropriate	 to	
consider	 cash	 flows	 for	 a	 term	 longer	 than	 5	 years	 because	 goodwill	 is	 considered	 to	 have	 an	 indefinite	 life.	 This	 rate	
does	 not	 exceed	 the	 average	 long	 term	 growth	 rate	 for	 the	 relevant	 markets.
Sensitivity to changes in assumptions
The	 Group’s	 impairment	 review	 is	 sensitive	 to	 a	 change	 in	 the	 key	 assumptions	 used,	 most	 notably	 the	 discount	
rates,	 the	 perpetuity	 growth	 rates	 and	 expected	 future	 cash	 flows.	 Based	 on	 the	 Group’s	 sensitivity	 analysis,	 a	
reasonably	 possible	 change	 in	 the	 discount	 rate	 or	 perpetuity	 growth	 rate	 could	 cause	 an	 impairment	 in	 either	 the	
SMIRT	 or	 PEPs	 CGUs.
An	 increase	 of	 0.4	 percentage	 points	 in	 the	 discount	 rate	 or	 a	 reduction	 of	 0.4	 percentage	 points	 in	 the	 perpetuity	
growth	 rate	 would	 cause	 the	 value	 in	 use	 for	 SMIRT	 to	 fall	 below	 its	 total	 carrying	 value	 of	 £1.36m	 (including	 both	
goodwill	 and	 other	 intangible	 assets	 attributed	 to	 the	 product	 line).
An	 increase	 of	 1.5	 percentage	 points	 in	 the	 discount	 rate	 or	 a	 reduction	 of	 1.5	 percentage	 points	 in	 the	 perpetuity	
growth	 rate	 would	 cause	 the	 value	 in	 use	 for	 PEPs	 to	 fall	 below	 its	 total	 carrying	 value	 of	 £2.5m	 (including	 both	
goodwill	 and	 other	 intangible	 assets	 attributed	 to	 the	 product	 line).
	
12.  Other intangible assets
	 Intellectual	 Development	 Software	 Incorp.	 	 Customer
	 property	 costs	 licences	 	 costs	 lists	 Total	
	 £’000	 £’000	 £’000	 £’000	 £’000	 £’000
Cost:
As	 at	 1	 January	 2009	 1,452	 3,355	 787	 108	 54	 5,756
Exchange	 movements	 (12)	 (83)	 (28)	 (7)	 (5)	 (135)
Additions	 –	 1,303	 7	 –	 –	 1,310
Disposals	 –	 –	 (38)	 –	 –	 (38)
	 	 	 	 	 	
As at 31 December 2009 1,440 4,575 728 101 49 6,893
	 	 	 	 	 	
Accumulated	 amortisation:
As	 at	 1	 January	 2009	 682	 544	 589	 76	 28	 1,919
Exchange	 movements	 (4)	 (12)	 (28)	 (5)	 (3)	 (52)
Charge	 for	 the	 year	 144	 561	 63	 10	 17	 795
Disposals	 –	 –	 (38)	 –	 –	 (38)
	 	 	 	 	 	
As at 31 December 2009 822 1,093 586 81 42 2,624
	 	 	 	 	 	
Net	 book	 value:
As	 at	 1	 January	 2009	 770	 2,811	 198	 32	 26	 3,837
	 	 	 	 	 	
As at 31 December 2009 618 3,482 142 20 7 4,269
	 	 	 	 	 	
35 V e r o S o f t w a r e P l c
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17872	 19/05/2010	 Proof	8
12.  Other intangible assets –	 continued
	 Intellectual	 Development	 Software	 Incorp.	 	 Customer
	 property	 costs	 licences	 	 costs	 lists	 Total	
	 £’000	 £’000	 £’000	 £’000	 £’000	 £’000
Cost:
As	 at	 1	 January	 2008	 1,413	 2,145	 499	 79	 40	 4,176
Exchange	 movements	 39	 202	 97	 23	 14	 375
Additions	 –	 1,008	 191	 6	 –	 1,205
	 	 	 	 	 	
As	 at	 31	 December	 2008	 1,452	 3,355	 787	 108	 54	 5,756
	 	 	 	 	 	
Accumulated	 amortisation:
As	 at	 1	 January	 2008	 529	 214	 468	 48	 8	 1,267
Exchange	 movements	 10	 18	 91	 18	 6	 143
Charge	 for	 the	 year	 143	 312	 30	 10	 14	 509
	 	 	 	 	 	
As	 at	 31	 December	 2008	 682	 544	 589	 76	 28	 1,919
	 	 	 	 	 	
Net	 book	 value:
As	 at	 1	 January	 2008	 884	 1,931	 31	 31	 32	 2,909
 –––––––– –––––––– –––––––– –––––––– –––––––– ––––––––
As	 at	 31	 December	 2008	 770	 2,811	 198	 32	 26	 3,837
	 	 	 	 	 	
	
All	 the	 Group’s	 intangible	 assets	 are	 assessed	 for	 impairment	 annually	 as	 described	 in	 note	 11.
13.  Non current trade and other receivables
£319,000	 (2008:	 nil)	 represents	 trade	 receivables	 falling	 due	 after	 more	 than	 one	 year	 as	 a	 result	 of	 specific	 sale	
agreements.
14.  Held for sale
	 	 Land	 &	
	 	 buildings
	 	 £’000
	 	
	 As	 at	 1	 January	 2009	 –
	 Transfer	 from	 property,	 plant	 and	 equipment	 224
	
 As at 31 December 2009	 224
	
During	 the	 year	 the	 Camtek	 Limited	 building	 was	 vacated	 as	 a	 result	 of	 restructuring	 and	 made	 available	 for	 sale.	 It	 is	
currently	 being	 marketed	 for	 sale.
The	 land	 and	 buildings	 are	 being	 carried	 at	 their	 fair	 value	 less	 costs	 to	 sell.	
15.  Investments
Vero	 Software	 Plc	 has	 the	 following	 subsidiary	 undertakings,	 all	 of	 which	 are	 engaged	 in	 the	 development,	 marketing	
and	 distribution	 of	 the	 Group’s	 products:
	 Proportion	 of	 share	 Country	 of
	 capital	 held	 incorporation
	 %
Vero	 Italia	 S.p.A.	 100	 Italy
Vero	 UK	 Limited	 100	 United	 Kingdom
Vero	 USA	 Inc.	 100	 USA
Vero	 Canada	 Inc*	 100	 Canada
Vero	 Japan	 KK	 100	 Japan
Smirtware	 Inc*	 100	 USA
Camtek	 Ltd	 100	 United	 Kingdom
Vero	 China	 100	 China
*	 Investment	 held	 by	 Vero	 USA	 Inc.
36
Notes	 to	 the	 financial	 statements
	 A n n u a l R e p o r t a n d A c c o u n t s 2 0 0 9
37
17872	 19/05/2010	 Proof	8
15.  Investments –	 continued
On	 31	 December	 2009	 Visi	 US	 Inc	 merged	 with	 Vero	 USA	 Inc.
The	 Group’s	 4%	 equity	 investment	 in	 Camtek	 GmbH,	 a	 company	 incorporated	 in	 Germany,	 was	 sold	 to	 Camtek	
GmbH	 in	 the	 year	 for	 £4,000	 (2008:	 nil).
16.  Deferred tax
The	 net	 movement	 on	 the	 deferred	 tax	 account	 is	 set	 out	 below
 Year	 ended	 31	 December
	 2009 2008
 £’000 £’000
At	 1	 January	 	 398 392
Charged	 to	 the	 statement	 of	 financial	 performance	 (note	 8)	 30 23
Exchange	 movement	 5 (17)
	 	
As	 at	 31	 December	 	 433 398
	 	
The	 movement	 in	 deferred	 tax	 assets	 and	 liabilities	 is	 set	 out	 below.
a)	 Deferred	 tax	 assets	 Accelerated tax Accelerated	 tax
	 depreciation 	 depreciation
	 2009 2008
	 £’000 £’000
At	 1	 January	 	 239 147
Credited	 to	 the	 statement	 of	 financial	 performance	 67 69
Exchange	 movement	 (6) 23
	 	
As	 at	 31	 December	 	 300 239
	 	
b)	 Deferred	 tax	 liabilities
	 Other  	 Other
	 Development timing  Development	 timing
	 costs differences Total costs	 differences	 Total
	 2009 2009 2009 2008	 2008	 2008
	 £’000 £’000 £’000 £’000	 £’000	 £’000
At	 1	 January	 	 589 48 637 461	 78	 539
Charged	 to	 the	
	 statement	 of	
	 financial	 performance	 131 (34) 97 122	 (30)	 92
Exchange	 movement	 – (1) (1) 6	 –	 6
	 	 	 	 	 	
As	 at	 31	 December	 	 720 13 733 589	 48	 637
	 	 	 	 	 	
	
Deferred	 tax	 assets	 are	 recognised	 for	 tax	 losses	 carried	 forward	 only	 to	 the	 extent	 that	 the	 realisation	 of	 the	 related	
tax	 benefit	 through	 future	 taxable	 profits	 is	 considered	 probable.	 The	 Group	 has	 not	 recognised	 deferred	 tax	 assets	 of	
£917,000	 (2008:	 £665,000)	 in	 respect	 of	 losses	 that	 can	 be	 carried	 forward	 against	 future	 taxable	 income.
37 V e r o S o f t w a r e P l c
38
17872	 19/05/2010	 Proof	8
17.  Trade and other receivables
 Year	 ended	 31	 December
	 2009 2008
 £’000 £’000
Trade	 receivables	 6,829 8,054
Less:	 provision	 for	 impairment	 of	 trade	 receivables	 (1,035) (1,153)
	 	
Trade	 receivables	 –	 net	 5,794 6,901
Other	 debtors	 200 297
Prepayments	 and	 accrued	 income	 424 706
	 	
	 6,418 7,904
	 	
As	 at	 31	 December,	 the	 aging	 analysis	 of	 trade	 receivables	 is	 as	 follows:
	 	 Neither	
	 	 past
	 	 due	 nor	 Past	 due	 but	 not	 impaired
	 Total	 impaired	 <30	 days	 30-60	 days	 61-90	 days	 91-120	 days	 >120	 days
	 £’000	 £’000	 £’000	 £’000	 £’000	 £’000	 £’000
2009 5,794 3,406 438 383 193 115 1,259
2008	 6,901	 3,884	 846	 364	 261	 128	 1,418
	 	 	 	 	 	 	
The	 amounts	 that	 are	 past	 due	 but	 not	 impaired	 relate	 to	 a	 number	 of	 dealers	 and	 independent	 customers.	 All	
balances	 are	 reviewed	 monthly	 and	 previous	 payment	 history	 and	 the	 most	 recent	 understanding	 of	 the	 customer’s	
financial	 position	 are	 assessed	 to	 allow	 management	 to	 judge	 when	 the	 provision	 for	 impairment	 is	 required.	 Balances	
that	 are	 past	 120	 days	 overdue	 represent	 dealers	 with	 whom	 a	 long	 standing	 relationship	 has	 been	 held	 and	 the	 Group	
deems	 it	 necessary	 to	 support	 its	 partners	 during	 the	 current	 economic	 climate.
A	 provision	 for	 impairment	 of	 trade	 receivables	 is	 established	 when	 there	 is	 objective	 evidence	 that	 the	 Group	 will	 not	
be	 able	 to	 collect	 all	 amounts	 due	 according	 to	 the	 agreed	 terms.	 The	 creation	 and	 release	 of	 provision	 for	 impaired	
receivables	 has	 been	 included	 in	 “Selling	 expenses”	 in	 the	 statement	 of	 financial	 performance.
Movements	 on	 the	 Group	 provision	 for	 impairment	 of	 trade	 receivables	 are	 as	 follows:
 Year	 ended	 31	 December
	 2009 2008
 £’000 £’000
As	 at	 1	 January	 1,153 1,141
Provision	 for	 receivables	 impairment	 258 215
Receivables	 written	 off	 during	 the	 year	 as	 uncollectable	 (326) (384)
Exchange	 movements	 (50) 181
	 	
At	 31	 December	 1,035 1,153
	 	
38
Notes	 to	 the	 financial	 statements
	 A n n u a l R e p o r t a n d A c c o u n t s 2 0 0 9
39
17872	 19/05/2010	 Proof	8
17.  Trade and other receivables –	 continued
Of	 the	 trade	 receivables	 balances	 at	 the	 end	 of	 the	 year,	 £420,000	 (2008:	 £575,000)	 is	 due	 from	 the	 Group’s	 largest	
customer.	 A	 balance	 of	 £611,000	 (2008:	 £158,000)	 is	 due	 from	 Camtek	 Gmbh,	 resulting	 from	 a	 specific	 sale	 of	
licence	 code.	 There	 are	 no	 other	 customers	 who	 represent	 more	 than	 5%	 of	 the	 total	 balance	 of	 trade	 receivables.	
The	 directors	 consider	 a	 significant	 concentration	 of	 credit	 risk	 to	 be	 a	 level	 of	 5%	 or	 more.	 The	 Group	 has	 no	
significant	 concentrations	 of	 credit	 risk	 other	 than	 the	 balances	 noted	 above,	 since	 the	 risk	 is	 spread	 over	 a	 large	
number	 of	 unrelated	 counterparties	 and	 different	 industries.
The	 other	 classes	 within	 trade	 and	 other	 receivables	 do	 not	 contain	 impaired	 assets.
18.  Financial assets
 Year	 ended	 31	 December
	 2009 2008
 £’000 £’000
Guaranteed	 income	 certificate	 3 –
	 	
A	 Guaranteed	 income	 certificate	 is	 held	 in	 the	 name	 of	 Vero	 Canada	 as	 security	 for	 credit	 card	 balances.
19.  Cash and cash equivalents
 Year	 ended	 31	 December
	 2009 2008
 £’000 £’000
Bank	 balances	 and	 cash	 in	 hand	 2,323	 1,632
	 	
Cash	 and	 cash	 equivalents	 include	 the	 following	 for	 the	 purpose	 of	 the	 cash	 flow	 statement:
 Year	 ended	 31	 December
	 2009 2008
 £’000 £’000
Bank	 balances	 and	 cash	 in	 hand	 2,323 1,632
Bank	 overdrafts	 (note	 22)	 (1,450) (1,540)
	 	
	 873 92
	 	
39 V e r o S o f t w a r e P l c
40
17872	 19/05/2010	 Proof	8
20.  Non current bank loans and borrowings
 Year	 ended	 31	 December
	 	 2009 2008
 Note	 £’000 £’000
Bank	 loans	 	 2,531 1,039
Hire	 purchase	 and	 finance	 lease	 obligations	 27	 41 80
	 	
	 	 2,572 1,119
	 	
Bank	 loans:
One	 to	 two	 years	 	 414 341
Two	 to	 five	 years	 	 2,117 698
	 	
	 2,531 1,039
	 	
£681,000	 (2008:	 £955,000)	 of	 the	 outstanding	 loan	 balances	 relate	 to	 advances	 from	 the	 Italian	 Government	 with	 a	
preferential	 interest	 rate	 between	 0.73%	 and	 0.88%.	 The	 loans	 are	 repayable	 by	 6	 monthly	 instalments	 over	 5	 years.
In	 December	 2009	 Vero	 Software	 Plc	 entered	 into	 a	 £2	 million,	 5	 year	 secured	 mezzanine	 term	 Loan	 with	 the	 Capital	
For	 Enterprise	 Fund.	 The	 principal	 terms	 of	 the	 loan	 are:
Interest	 of	 12%	 (initially	 10%	 with	 2%	 rolled	 up),	 redemption	 premium	 on	 any	 capital	 being	 repaid	 of	 15%	 if	 capital	
is	 repaid	 before	 the	 third	 anniversary	 of	 completion;	 25%	 if	 capital	 is	 repaid	 on	 or	 after	 the	 third	 anniversary	 of	
completion	 but	 before	 the	 fourth	 anniversary	 of	 completion;	 and	 35%	 if	 capital	 is	 repaid	 on	 or	 after	 the	 fourth	
anniversary	 of	 completion.	 The	 Company	 has	 also	 issued	 warrants	 for	 3%	 of	 the	 fully	 diluted	 share	 capital	 of	 the	
Company	 in	 connection	 with	 the	 loan	 (note	 25).
21. Provisions for liabilities 
	 Agency	 Staff	
	 indemnity	 	 leaving
	 fund	 indemnity	 Total	
	 £’000	 £’000	 £’000
As	 at	 1	 January	 2009	 37	 601	 638
Exchange	 movements	 (3)	 (47)	 (50)
Charged	 to	 the	 statement	 of	 financial	 performance	 6	 19	 25
	 	 	
As at 31 December 2009 40 573 613
	 	 	
The	 agency	 indemnity	 fund	 is	 in	 respect	 of	 the	 Group’s	 Italian	 company	 and	 becomes	 payable	 on	 termination	 of	
certain	 agency	 agreements.
The	 staff	 leaving	 indemnities	 are	 in	 respect	 of	 the	 Group’s	 Italian	 and	 Japanese	 subsidiaries	 and	 become	 payable	
when	 staff	 leave	 a	 company,	 if	 not	 paid	 earlier.
40
Notes	 to	 the	 financial	 statements
	 A n n u a l R e p o r t a n d A c c o u n t s 2 0 0 9
41
17872	 19/05/2010	 Proof	8
22.  Current bank loans and borrowings
 Year	 ended	 31	 December
	 	 2009 2008
 Note	 £’000 £’000
Bank	 overdrafts	 	 1,450 1,540
Bank	 loans	 	 408 1,741
Hire	 purchase	 and	 finance	 lease	 obligations	 27	 71 93
	 	
	 1,929 3,374
	 	
The	 Group’s	 Italian	 bank	 overdrafts	 are	 secured	 by	 means	 of	 fixed	 and	 floating	 charges	 over	 the	 assets	 of	 Vero	 Italia	
S.p.A.
The	 Group’s	 loan	 is	 secured	 by	 means	 of	 a	 cross	 guarantee	 and	 charge	 over	 the	 assets	 and	 undertakings	 of	 Vero	 UK	
Limited,	 Camtek	 Limited,	 Vero	 Software	 Plc,	 Vero	 Italia	 S.p.A.,	 Vero	 USA	 Inc,	 Vero	 Canada,	 and	 Vero	 Japan	 KK.	
23.  Other creditors
 Year	 ended	 31	 December
	 2009 2008
 £’000 £’000
Other	 taxes	 and	 social	 security	 601 572
Pension	 contributions	 19 19
Accruals	 1,008 1,464
Other	 creditors	 	 123 137
	 	
	 1,751 2,192
	 	
24.  Share capital
 Year	 ended	 31	 December
	 2009 2008
 £’000 £’000
Authorised
80,000,000	 ordinary	 shares	 of	 0.5	 pence	 each
(2008:	 80,000,000	 ordinary	 shares	 of	 0.5	 pence	 each)	 400	 400
	 	
Allotted,	 called	 up	 and	 fully	 paid
37,261,166	 ordinary	 shares	 of	 0.5	 pence	 each
(2008:	 37,261,166	 ordinary	 shares	 of	 0.5	 pence	 each)	 186	 186
	 	
All	 shares	 carry	 equal	 rights	 in	 respect	 of	 voting,	 distribution	 of	 dividends	 and	 the	 repayment	 of	 capital.
41 V e r o S o f t w a r e P l c
42
17872	 19/05/2010	 Proof	8
25.  Share options
Details	 of	 employees	 share	 options	 are	 as	 follows:
	 As	 at	 	 As at
	 1	 January	 Lapsed	 in	 31 December Option	 Period
	 2009	 year	 2009 price	 exercisable
Unapproved	 900,000	 –	 900,000 14p	 21/10/07	 -	 20/10/11
EMI	 Scheme	 1,700,000	 –	 1,700,000 14p	 22/10/07	 -	 21/10/11
	 	 	
Total	 	 2,600,000	 –	 2,600,000 	
	 	 	
The	 Group	 uses	 the	 Black–Scholes	 model	 to	 value	 its	 share	 options.	 Expected	 volatility	 was	 determined	 by	 calculating	
the	 historical	 volatility	 of	 the	 Group’s	 share	 price	 over	 the	 3	 years	 prior	 to	 the	 granting	 of	 the	 options.	 The	 options	
have	 passed	 the	 vesting	 period,	 therefore	 the	 charge	 for	 the	 year	 is	 nil	 (2008:	 nil).
The	 schemes	 are	 summarised	 on	 page	 15.
Inputs	 into	 the	 Black–Scholes	 model	 are	 as	 follows:
Weighted	 average	 share	 price	 14p
Weighted	 average	 exercise	 price	 14p
Expected	 volatility	 33%
Vesting	 period	 3	 years
Risk	 free	 rate	 4.75%
Details	 of	 interests	 in	 share	 warrants	 are	 as	 follows:
	 	 As	 at	 	 As	 at	
	 	 1	 January	 Granted	 31	 December	 Option
	 	 2008	 in	 year	 2009	 price
	 	 	 	 	
Warrants	 	 –	 	 1,232,820	 1,232,820	 0.5p
	 	 	 	
Warrants	 were	 issued	 to	 Maven	 Capital	 Partners	 in	 connection	 with	 the	 Capital	 for	 Enterprise	 Fund	 loan.	 The	 warrants	
are	 for	 3%	 of	 the	 fully	 diluted	 share	 capital	 of	 the	 Company	 and	 are	 exercisable	 within	 24	 months	 of	 repayment	 of	 the	
loan	 or	 earlier	 on	 a	 change	 of	 control,	 sale	 or	 listing.	 The	 Company	 has	 the	 option	 to	 pay	 the	 equivalent	 in	 cash.
26.  Other reserves
	 Translation	 Other	 Total	 other
	 reserve	 reserve	 reserve
	 £’000	 £’000	 £’000
As	 at	 1	 January	 2009	 12	 14	 26
Transfer	 from	 retained	 earnings	 –	 8	 8
Exchange	 movements	 (51)	 (1)	 (52)
	 	 	
As at 31 December 2009 (39) 21 (18)
	 	 	
The	 other	 reserve	 relates	 to	 the	 Group’s	 Italian	 subsidiary	 undertaking	 whereby	 a	 provision	 for	 the	 maintenance	 	
of	 capital	 is	 required,	 in	 accordance	 with	 current	 legislation,	 provided	 for	 at	 the	 rate	 of	 5	 per	 cent	 of	 net	 profits	 per	
annum	 up	 to	 a	 level	 of	 20	 per	 cent	 of	 called	 up	 share	 capital.
42
Notes	 to	 the	 financial	 statements
	 A n n u a l R e p o r t a n d A c c o u n t s 2 0 0 9
43
17872	 19/05/2010	 Proof	8
27.  Finance leases
 Year	 ended	 31	 December
	 2009 2008
 £’000 £’000
Gross	 finance	 lease	 liabilities	 –	 minimum	 lease	 payments:
No	 later	 than	 one	 year	 74 99
Later	 than	 one	 year	 and	 no	 later	 than	 five	 years	 42 83
	 	
	 116 182
	 	
Finance	 charges	 on	 finance	 leases:
No	 later	 than	 one	 year	 3 6
Later	 than	 one	 year	 and	 no	 later	 than	 five	 years	 1 3
	 	
	 4 9
	 	
Present	 value	 of	 finance	 lease	 liabilities	 is	 as	 follows:
No	 later	 than	 one	 year	 71 93
Later	 than	 one	 year	 and	 no	 later	 than	 five	 years	 41 80
	 	
	 112 173
	 	
	
28.  Operating leases – minimum lease payments
At	 the	 reporting	 date,	 the	 Group	 had	 outstanding	 commitments	 for	 future	 minimum	 lease	 payments	 under	 non-
cancellable	 operating	 leases,	 which	 fall	 due	 as	 follows:
 Year ended 31 December 2009 Year	 ended	 31	 December	 2008
 Properties Other Properties	 Other
 £’000 £’000 £’000	 £’000
Within	 one	 year	 331 300 336	 333
In	 the	 second	 to	 fifth	 years	 inclusive	 584 245 694	 526
After	 five	 years	 10 – 17	 –
	 	 	 	
	 925 545 1,047	 859
	 	 	 	
43 V e r o S o f t w a r e P l c
44
17872	 19/05/2010	 Proof	8
44
29.  Financial instruments
 Year	 ended	 31	 December
	 2009 2008
 £’000 £’000
Fair	 value	 adjustment	 of	 forward	 contracts	 	 – 122
	 	
At	 31	 December	 2009	 the	 Group	 held	 no	 forward	 exchange	 contracts.	 The	 forward	 contracts	 held	 as	 at	 31	 December	
2008	 were	 valued	 based	 on	 open	 market	 observable	 inputs	 (level	 2).
Sensitivity analysis
The	 following	 analyses	 illustrate	 the	 effect	 that	 specific	 changes	 could	 have	 had	 on	 our	 results	 in	 the	 2009	 financial	
year.	 This	 analysis	 is	 for	 illustrative	 purposes	 only,	 as	 in	 practice	 market	 rates	 rarely	 change	 in	 isolation.	 Actual	 results	 in	
the	 future	 may	 differ	 materially	 from	 these	 results	 due	 to	 developments	 in	 the	 global	 financial	 markets	 which	 may	 cause	
fluctuations	 in	 interest	 and	 exchange	 rates	 to	 vary	 from	 the	 hypothetical	 amounts	 disclosed	 in	 the	 following	 table,	 which	
therefore	 should	 not	 be	 considered	 a	 projection	 of	 likely	 future	 events	 and	 losses.
	 Weakening	 of	 GBP	 Strengthening	 of	 GBP
	 	 	 10%	 20%	 10%	 20%
	 	 	 £’000	 £’000	 £’000	 £’000
Impact	 on	 statement	 of	 financial	 performance	 gain/(loss)
Euro	 	 	 378	 739	 (462)	 (1,108)
Japanese	 Yen	 	 	 6	 33	 (7)	 (49)
US	 $	 	 	 71	 293	 (86)	 (440)
Canadian	 $	 	 	 4	 6	 (4)	 (10)
	 	 	 	 	 	
	 	 	 459	 1,071	 (559)	 (1,607)
	 	 	 	 	 	
	 Weakening	 of	 GBP	 Strengthening	 of	 GBP
	 	 	 10%	 20%	 10%	 20%
	 	 	 £’000	 £’000	 £’000	 £’000
Impact	 on	 equity	 gain/(loss)
Euro	 	 	 111	 204	 (136)	 (305)
Japanese	 Yen	 	 	 11	 20	 (13)	 (30)
US	 $	 	 	 172	 315	 (210)	 (473)
Canadian	 $	 	 	 (11)	 (20)	 13	 30
	 	 	 	 	 	
	 	 	 283	 519	 (346)	 (778)
	 	 	 	 	 	
Notes	 to	 the	 financial	 statements
	 A n n u a l R e p o r t a n d A c c o u n t s 2 0 0 9
45
17872	 19/05/2010	 Proof	8
45
29. Financial instruments	 –	 continued
Foreign currency risk
Group	 companies	 have	 their	 local	 currency	 as	 their	 functional	 currency.	 The	 Group	 policy	 has	 the	 objective	 of	
reducing	 exposure	 to	 revaluation	 of	 monetary	 assets	 and	 liabilities.	 Under	 the	 policy,	 material	 outstanding	 foreign	
currency	 balances	 arising	 from	 transactions	 in	 currencies	 other	 than	 a	 company’s	 functional	 currency,	 are	 hedged	
by	 either	 currency	 deposits,	 borrowings	 in	 currency	 or	 forward	 contracts.	 At	 the	 year	 end	 there	 were	 no	 forward	
contracts	 outstanding	 (2008:	 £1,689,000).
	 At	 31	 December
	 2009 2008
	 US$ Euro Yen US$	 Euro	 Yen
	 holdings holdings holdings holdings	 holdings	 holdings
	 £’000 £’000 £’000 £’000	 £’000	 £’000
Net	 foreign	 currency	 monetary
assets/(liabilities)	 1,151 281 330	 68	 (261)	 453
	 	 	 	 	 	
The	 fair	 value	 of	 the	 financial	 instruments	 is	 equivalent	 to	 the	 amount	 stated	 in	 the	 financial	 statements.
Liquidity risk
Prudent	 liquidity	 management	 implies	 maintaining	 sufficient	 cash	 locally	 and	 the	 availability	 of	 committed	 credit	
facilities.	 Each	 group	 company	 is	 mainly	 financed	 by	 equity,	 self-generated	 cash	 flows	 and	 inter	 company	 loans.	
Credit risk
The	 Group’s	 credit	 risk	 is	 primarily	 attributable	 to	 its	 trade	 receivables.	 The	 amounts	 presented	 in	 the	 statement	 of	
financial	 performance	 are	 net	 of	 allowances	 for	 doubtful	 receivables,	 estimated	 by	 the	 Group’s	 management	 based	 on	
prior	 experience	 and	 their	 assessment	 of	 the	 current	 economic	 environment.	 Credit	 risks	 of	 new	 customers	 must	 be	
assessed	 locally	 before	 entering	 into	 contracts.	 The	 overall	 Group	 debtor	 exposure	 is	 monitored	 by	 the	 Group	 finance	
department	 and	 local	 entities	 must	 report	 the	 current	 exposure	 on	 a	 monthly	 basis.
The	 risk	 on	 liquid	 funds	 and	 derivative	 financial	 instruments	 is	 limited	 because	 the	 counterparties	 are	 banks	 with	 high	
credit-ratings	 assigned	 by	 international	 credit-rating	 agencies.
The	 Group	 has	 no	 significant	 concentration	 of	 credit	 risk,	 other	 than	 that	 disclosed	 in	 note	 17,	 with	 exposure	 spread	
over	 a	 large	 number	 of	 customers	 and	 counterparties.	 V e r o S o f t w a r e P l c
46
17872	 19/05/2010	 Proof	8
46
29. Financial instruments	 –	 continued
Interest rate risk
The	 Group’s	 exposure	 to	 the	 risk	 of	 changes	 in	 market	 interest	 rates	 relates	 primarily	 to	 the	 Group’s	 long	 term	 debt	
obligations	 carrying	 floating	 interest	 rates.	
The	 following	 table	 demonstrates	 the	 sensitivity	 to	 a	 reasonably	 possible	 change	 in	 interest	 rates,	 with	 all	 other	
variables	 held	 constant,	 of	 the	 Group’s	 profit	 before	 tax	 through	 the	 impact	 on	 cash	 balances	 and	 floating	 rate	
borrowings.	 There	 is	 no	 other	 impact	 on	 the	 Group’s	 equity.
	 Increase	 in	 interest	 rates	 Decrease	 in	 interest	 rates
	 1%	 2%	 1%	 2%
	 £’000	 £’000	 £’000	 £’000
Impact	 on	 statement	 of	 financial	 performance	 gain/(loss)
GBP	 1	 3	 (1)	 (3)
Euro	 	 4	 9	 (4)	 (9)
US	 $	 1	 1	 (1)	 (1)
	 	 	 	
	 6	 13	 (6)	 (13)
	 	 	 	
Capital management 
The	 Group’s	 objectives	 when	 managing	 capital	 are	 to	 safeguard	 the	 Group’s	 ability	 to	 continue	 as	 a	 going	 concern	
in	 order	 to	 provide	 returns	 for	 shareholders	 and	 benefits	 for	 other	 stakeholders	 and	 to	 maintain	 an	 optimal	 capital	
structure	 to	 reduce	 the	 cost	 of	 capital.	
No	 changes	 were	 made	 in	 the	 objectives,	 policies	 or	 processes	 during	 the	 years	 ended	 31	 December	 2009	 and	 31	
December	 2008.
The	 capital	 structure	 of	 the	 Group	 at	 31	 December	 2009	 consists	 of	 net	 debt	 (note	 30b)	 and	 total	 equity,	 comprising	
share	 capital,	 share	 premium,	 reserves	 and	 retained	 earnings,	 totalling	 £9,391,000	 at	 31	 December	 2009	 (2008:	
£9,503,000).
Financial liabilities
	 Fixed	 and	 floating	 rate
	 financial	 liabilities
	 	 Floating	 Fixed	 Non-interest	 Weighted	 Weighted
	 	 rate	 rate	 bearing	 average	 average
	 	 financial	 financial	 financial	 interest	 period	 until
Currency	 Total	 liabilities	 liabilities	 liabilities	 rate	 maturity
	 £’000	 £’000	 £’000	 £’000	 %	 Years
At 31 December 2009
Sterling 4,107 58 1,729 2,320 12 5
US $ 1,223 736 – 487 8 –
Euro 3,937 768 967 2,202 1 3
Yen 861 – 243 618 3 3
	 	 	 	 	 	
Gross financial liabilities 10,128 1,562 2,939 5,627
	 	 	 	 	 	
At	 31	 December	 2008
Sterling	 3,228	 1,197	 –	 2,031	 6	 3
US	 $	 1,653	 1,023	 –	 630	 3	 2
Euro	 5,238	 852	 1421	 2,965	 4	 4
Yen	 891	 –	 –	 891	 –	 –
	 	 	 	 	 	
Gross	 financial	 liabilities	 11,010	 3,072	 1421	 6,517	 	
	 	 	 	 	 	
Interest	 on	 floating	 rate	 liabilities	 is	 based	 on	 the	 relevant	 national	 inter	 bank	 rates.
Non-interest	 bearing	 financial	 liabilities	 consist	 of	 accruals,	 trade	 and	 other	 creditors	 and	 provisions.
Notes	 to	 the	 financial	 statements
	 A n n u a l R e p o r t a n d A c c o u n t s 2 0 0 9
47
17872	 19/05/2010	 Proof	8
29. Financial instruments	 –	 continued
	 The	 following	 table	 details	 the	 Group’s	 expected	 maturity	 for	 liabilities.
	 At 31 December 2009
	 Floating Fixed Non interest	 	 rate rate bearing	 	 financial financial financial	 	 liabilities liabilities liabilities Total
 £’000 £’000 £’000 £’000
On demand 1,462 – 613 2,075
One year or less 10 200 5,014 5,224
One to two years 66 301 – 367
Two to five years 38 2,708 – 2,746
Five years and over – 1,644 – 1,644
    
 1,576 4,853 5,627 12,056
	 	 	 	
	 At	 31	 December	 2008
	 Floating	 Fixed	 Non	 interest	
	 rate	 rate	 bearing	
	 financial	 financial	 financial	
	 liabilities	 liabilities	 liabilities	 Total
	 £’000	 £’000	 £’000	 £’000
On	 demand	 1,608	 –	 638	 2,246
One	 year	 or	 less	 20	 48	 5,879	 5,947
One	 to	 two	 years	 263	 –	 –	 263
Two	 to	 five	 years	 1,304	 1,432	 –	 2,736
Five	 years	 and	 over	 –	 –	 –	 –
	 	 	 	
	 3,195	 1,480	 6,517	 11,192
	 	 	 	
The	 amounts	 due	 on	 demand	 represent	 the	 Group’s	 overdrafts,	 also	 for	 staff	 and	 agents	 leaving	 indemnity	 provisions	
(note	 21).	
Financial assets
    Non	 interest
  Fixed	 rate Floating	 rate bearing
 	 financial financial financial
 Total assets assets assets
 £’000 £’000 £’000 £’000
As at 31 December 2009
Sterling	 1,694 – 1,527 167
US $	 1,999 – 149 1,850
Euro	 3,928 – 117 3,811
Yen	 1,209 – 533 676
	 	 	 	
Gross	 financial	 assets	 8,830 – 2,326 6,504
	 	 	 	
As	 at	 31	 December	 2008
Sterling	 1,039	 –	 459	 580
US	 $	 1,891	 –	 149	 1,742
Euro	 4,840	 –	 288	 4,552
Yen	 1,871	 –	 736	 1,135
	 	 	 	
Gross	 financial	 assets	 9,641	 –	 1,632	 8,009
	 	 	 	
Fair values of financial assets and financial liabilities
There	 is	 no	 significant	 difference	 between	 the	 carrying	 amounts	 shown	 in	 the	 statement	 of	 financial	 performance	 and	
the	 fair	 values	 of	 the	 Group’s	 financial	 instruments,	 other	 than	 the	 loan	 from	 the	 Italian	 Government	 (note	 20)	 which	 has	
a	 fair	 value	 of	 £614,000.	 For	 current	 trade	 and	 other	 receivables/payables	 with	 a	 remaining	 life	 of	 less	 than	 one	 year,	
the	 nominal	 amount	 is	 deemed	 to	 reflect	 the	 fair	 value V e r o S o f t w a r e P l c
48
17872	 19/05/2010	 Proof	8
30.  Notes to cash flow statement
a)	 Reconciliation	 of	 operating	 profit	 to	 net	 cash	 inflow	 from	 operating	 activities
 Year	 ended	 31	 December
	 2009 2008
 £’000 £’000
Operating	 profit	 	 828 1,088
Adjustments	 for:
Depreciation	 and	 amortisation	 1,003 714
Property	 impairment	 charge	 129 –
Goodwill	 impairment	 charge	 20 –
(Profit)/loss	 on	 sale	 of	 plant,	 property	 and	 equipment	 (13) 12
Increase	 in	 inventories	 (15) (4)
Decrease/(increase)	 in	 trade	 and	 other	 receivables	 230 (152)
(Decrease)/increase	 in	 trade	 and	 other	 payables	 (513) 	 258
	 	
Cash	 generated	 from	 operations	 1,669 1,916
	 	
b)	 Analysis	 of	 movements	 in	 cash	 and	 debt	 in	 the	 year
	 As	 at	 	 	 	 	 	 	 As	 at
	 1	 January	 Cash	 Exchange	 Other	 31	 December	
	 2009	 flows	 movements	 movements	 2009
	 £’000	 £’000	 £’000	 £’000	 £’000
Cash	 at	 bank	 1,632	 797	 (106)	 -	 2,323
Bank	 loans	 and	 overdrafts	 (1,540)	 39	 51	 -	 (1,450)
Debt	 due	 within	 one	 year	 (1,741)	 1,466	 29	 (162)	 (408)
Debt	 due	 after	 more	 than	 one	 year	 (1,039)	 766	 75	 (2,333)	 (2,531)
Hire	 purchase	 and	 finance	 leases	 (173)	 97	 8	 (44)	 (112)
	 	 	 	 	
	 (2,861)	 3,165	 57	 (2,539)	 (2,178)
	 	 	 	 	
During	 the	 year	 the	 Group	 entered	 into	 hire	 purchase	 and	 finance	 lease	 arrangements	 in	 respect	 of	 assets	 with	 a	 total	
capital	 value	 at	 the	 inception	 of	 the	 lease	 of	 £44,000	 (2008:	 £92,000).
The	 Company	 completed	 a	 refinancing	 of	 its	 UK	 loans	 in	 December	 2009	 with	 an	 advance	 of	 £2	 million.
Notes	 to	 the	 financial	 statements
	 A n n u a l R e p o r t a n d A c c o u n t s 2 0 0 9
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49
We	 have	 audited	 the	 financial	 statements	 of	 Vero	 Software	 Plc	 for	 the	 year	 ended	 31	 December	 2009	 which	 are	 set	 out	 on	
pages	 50	 to	 54.	 The	 financial	 reporting	 framework	 that	 has	 been	 applied	 in	 their	 preparation	 is	 applicable	 law	 and	 United	
Kingdom	 Accounting	 Standards	 (United	 Kingdom	 Generally	 Accepted	 Accounting	 Practice).
This	 report	 is	 made	 solely	 to	 the	 Company’s	 members,	 as	 a	 body,	 in	 accordance	 with	 Chapter	 3	 of	 Part	 16	 of	 the	
Companies	 Act	 2006.		 Our	 audit	 work	 has	 been	 undertaken	 so	 that	 we	 might	 state	 to	 the	 Company’s	 members	 those	
matters	 we	 are	 required	 to	 state	 to	 them	 in	 an	 auditor’s	 report	 and	 for	 no	 other	 purpose.	 To	 the	 fullest	 extent	 permitted	
by	 law,	 we	 do	 not	 accept	 or	 assume	 responsibility	 to	 anyone	 other	 than	 the	 Company	 and	 the	 Company’s	 members	 as	 a	
body,	 for	 our	 audit	 work,	 for	 this	 report,	 or	 for	 the	 opinions	 we	 have	 formed.
Respective responsibilities of directors and auditors 
As	 explained	 more	 fully	 in	 the	 Directors’	 Responsibilities	 Statement	 set	 out	 on	 page	 15,	 the	 directors	 are	 responsible	 for	
the	 preparation	 of	 the	 financial	 statements	 and	 for	 being	 satisfied	 that	 they	 give	 a	 true	 and	 fair	 view.	 Our	 responsibility	 is	 to	
audit	 the	 financial	 statements	 in	 accordance	 with	 applicable	 law	 and	 International	 Standards	 on	 Auditing	 (UK	 and	 Ireland).		
Those	 standards	 require	 us	 to	 comply	 with	 the	 Auditing	 Practices	 Boards	 (APB’s)	 Ethical	 Standards	 for	 Auditors.
Scope of the audit of the financial statements 
An	 audit	 involves	 obtaining	 evidence	 about	 the	 amounts	 and	 disclosures	 in	 the	 financial	 statements	 sufficient	 to	 give	
reasonable	 assurance	 that	 the	 financial	 statements	 are	 free	 from	 material	 misstatement,	 whether	 caused	 by	 fraud	 or	 error.		
This	 includes	 an	 assessment	 of:	 whether	 the	 accounting	 policies	 are	 appropriate	 to	 the	 Company’s	 circumstances	 and	
have	 been	 consistently	 applied	 and	 adequately	 disclosed;	 the	 reasonableness	 of	 significant	 accounting	 estimates	 made	 by	
the	 directors;	 and	 the	 overall	 presentation	 of	 the	 financial	 statements.
Opinion on financial statements
In	 our	 opinion	 the	 financial	 statements:
● l give	 a	 true	 and	 fair	 view	 of	 the	 state	 of	 the	 Company’s	 affairs	 as	 at	 31	 December	 2009	 and	 of	 its	 loss	 for	 the	 year	
then	 ended;
● l have	 been	 properly	 prepared	 in	 accordance	 with	 United	 Kingdom	 Generally	 Accepted	 Accounting	 Practice;	 and
● l have	 been	 prepared	 in	 accordance	 with	 the	 requirements	 of	 the	 Companies	 Act	 2006.
Opinion on other matter prescribed by the Companies Act 2006
In	 our	 opinion	 the	 information	 given	 in	 the	 Directors’	 Report	 for	 the	 financial	 year	 for	 which	 the	 financial	 statements	 are	
prepared	 is	 consistent	 with	 the	 financial	 statements.
Matters on which we are required to report by exception
We	 have	 nothing	 to	 report	 in	 respect	 of	 the	 following	 matters	 where	 the	 Companies	 Act	 2006	 requires	 us	 to	 report	 to	 you	 if,	
in	 our	 opinion:
● l adequate	 accounting	 records	 have	 not	 been	 kept,	 or	 returns	 adequate	 for	 our	 audit	 have	 not	 been	 received	 from	
branches	 not	 visited	 by	 us;	 or
● l the	 financial	 statements	 are	 not	 in	 agreement	 with	 the	 accounting	 records	 and	 returns;	 or
● l certain	 disclosures	 of	 directors’	 remuneration	 specified	 by	 law	 are	 not	 made;	 or
● l we	 have	 not	 received	 all	 the	 information	 and	 explanations	 we	 require	 for	 our	 audit.
Joanne	 Herniman
Senior Statutory Auditor
For	 and	 on	 behalf	 of	 Moore	 Stephens	 LLP,	 Statutory Auditor
150	 Aldersgate	 Street
London
EC1A	 4AB
7	 May	 2010
Independent	 Auditors’	 Report	 to	 the	 Shareholders	 	
of	 Vero	 Software	 Plc V e r o S o f t w a r e P l c
50
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50
 As	 at	 31	 December
	 	 2009 2008
 Note	 £’000 £’000
Fixed assets:
Investments	 C	 5,440 5,336
	 	
Current assets:
Debtors	 D	 102 53
Cash	 at	 bank	 and	 in	 hand	 	 660 10
	 	
	 	 762 63
Creditors:	 amounts	 falling	 due	 within	 one	 year	 E	 (306) (1,483)
	 	
Net current assets/(liabilities) 	 456 (1,420)
	 	
Total assets less current liabilities 	 5,896 3,916
Creditors: amounts	 falling	 due	 after	 more	 than	 one	 year	 F	 (3,681) (1,526)
	 	
	 	 2,215 2,390
	 	
Capital and reserves
Issued	 share	 capital	 G	 186 186
Share	 premium	 account	 H	 1,860 1,860
Retained	 earnings	 H	 169 344
	 	
Shareholders’ funds	 	 2,215 2,390
	 	
There	 were	 no	 recognised	 gains	 or	 losses	 for	 the	 year	 other	 than	 those	 included	 in	 the	 profit	 and	 loss	 account.
Approved	 by	 the	 Board	 of	 directors	 on	 7	 May	 2010	 and	 signed	 on	 its	 behalf	 by
Don Babbs
Chief Executive
7	 May	 2010
Company	 balance	 sheet A n n u a l R e p o r t a n d A c c o u n t s 2 0 0 9
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A.  Accounting policies
Basis of preparation
The	 financial	 statements	 have	 been	 prepared	 on	 the	 going	 concern	 basis	 and	 in	 accordance	 with	 applicable	
accounting	 standards	 in	 the	 United	 Kingdom	 (UK	 GAAP).
No	 profit	 and	 loss	 account	 is	 presented	 for	 the	 Company	 as	 provided	 by	 s408	 of	 the	 Companies	 Act	 2006.
Investments
Investments	 are	 included	 at	 cost	 less	 any	 provision	 for	 permanent	 diminution	 in	 value.
Deferred taxation
Deferred	 tax	 is	 provided	 in	 full	 on	 timing	 differences	 which	 result	 in	 an	 obligation	 at	 the	 balance	 sheet	 date	 to	 pay	 more	
tax,	 or	 a	 right	 to	 pay	 less	 tax,	 at	 a	 future	 date,	 at	 rates	 expected	 to	 apply	 when	 they	 crystallise	 based	 on	 current	 tax	
rates	 and	 law.	 Timing	 differences	 arise	 from	 the	 inclusion	 of	 items	 of	 income	 and	 expenditure	 in	 taxation	 computations	
in	 periods	 different	 from	 those	 in	 which	 they	 are	 included	 in	 the	 financial	 statements.	 Deferred	 tax	 is	 not	 provided	 on	
unremitted	 earnings	 of	 subsidiaries	 where	 there	 is	 no	 commitment	 to	 remit	 those	 earnings.	 Deferred	 tax	 assets	 are	
recognised	 to	 the	 extent	 that	 it	 is	 regarded	 as	 more	 likely	 than	 not	 that	 they	 will	 be	 recovered.	 Deferred	 tax	 assets	 and	
liabilities	 are	 not	 discounted.	 Deferred	 tax	 is	 not	 recognised	 where	 it	 is	 not	 material.
Share based payments
The	 fair	 value	 of	 employee	 share	 plans	 is	 calculated	 using	 a	 Black–Scholes	 model.	 In	 accordance	 with	 FRS	 20	 “Share	
based	 payment”	 the	 resulting	 cost	 is	 charged	 to	 the	 profit	 and	 loss	 account	 over	 the	 vesting	 periods	 of	 the	 plan.	 The	
value	 of	 the	 charge	 is	 adjusted	 to	 reflect	 the	 expected	 and	 actual	 levels	 of	 options	 vesting.
Foreign currency
Transactions	 in	 foreign	 currency	 are	 included	 in	 the	 accounts	 at	 the	 rate	 of	 exchange	 ruling	 at	 the	 date	 of	 the	
transaction.	 Monetary	 assets	 and	 liabilities	 expressed	 in	 foreign	 currency	 are	 translated	 at	 the	 rates	 ruling	 at	 the	
balance	 sheet	 date	 and	 any	 differences	 on	 translation	 are	 dealt	 with	 in	 the	 profit	 and	 loss	 account.
Cash flow statement
The	 Company	 has	 taken	 advantage	 of	 the	 exemption	 in	 FRS	 1	 “Cash	 flow	 statements”,	 which	 provides	 that	 where	 a	
company	 is	 a	 member	 of	 a	 group	 and	 a	 consolidated	 cash	 flow	 statement	 is	 published,	 the	 Company	 does	 not	 have	 to	
prepare	 a	 cash	 flow	 statement.
Related party transactions
The	 Company	 has	 taken	 advantage	 of	 the	 exemption	 available	 under	 FRS	 8	 “Related	 Party	 Disclosures”	 not	 to	 disclose	
transactions	 between	 Group	 companies.	
B. Profit for the financial year
As	 permitted	 by	 s408	 of	 the	 Companies	 Act	 2006	 the	 Company	 has	 elected	 not	 to	 present	 its	 own	 profit	 and	 loss	
account	 for	 the	 year.	 The	 Company	 reported	 a	 loss	 for	 the	 financial	 year	 ended	 31	 December	 2009	 of	 £175,000	 	
(2008:	 £25,000	 profit).
Notes	 to	 the	 financial	 statements V e r o S o f t w a r e P l c
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C. Investments
Vero	 Software	 Plc	 has	 the	 following	 subsidiary	 undertakings,	 all	 of	 which	 are	 engaged	 in	 the	 development,	 marketing	
and	 distribution	 of	 the	 Group’s	 products:
	 Proportion	 of	 share	 	 Country	 of
	 capital	 held	 	 incorporation
	 %
Vero	 Italia	 S.p.A.	 100	 Italy
Vero	 UK	 Limited	 100	 United	 Kingdom
Vero	 USA	 Inc	 100	 USA
Vero	 Canada	 Inc*	 100	 Canada
Vero	 Japan	 KK	 100	 Japan
Smirtware	 Inc*	 100	 USA
Camtek	 Ltd	 100	 United	 Kingdom	
Vero	 China	 100	 China
*	 Investment	 held	 by	 Vero	 USA	 Inc
On	 31	 December	 2009	 Visi	 US	 Inc	 merged	 with	 Vero	 USA	 Inc.
The	 movement	 in	 investments	 was	 as	 follows:
	 2009 2008
 £’000 £’000
At	 1	 January	 5,336 5,250
Additions	 in	 the	 year	 104 86
	 	
At	 31	 December	 5,440 5,336
	 	
D. Debtors 
 Year	 ended	 31	 December
	 2009 2008
 £’000 £’000
Prepayments	 and	 accrued	 income	 102 53
	 	
A	 deferred	 tax	 asset	 of	 £257,000	 (2008:	 £250,000)	 in	 respect	 of	 trading	 losses	 carried	 forward	 has	 not	 been	
recognised	 on	 the	 basis	 that	 it	 is	 not	 certain	 that	 the	 Company	 will	 have	 sufficient	 profits	 in	 the	 future	 against	 which	 	
the	 losses	 may	 be	 set	 off.
Notes	 to	 the	 financial	 statements
	 A n n u a l R e p o r t a n d A c c o u n t s 2 0 0 9
53
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53
E.  Creditors: amounts falling due within one year
 Year	 ended	 31	 December
	 2009 2008
 £’000 £’000
Bank	 loans	 	 – 1,359
Trade	 creditors	 232 75
Accruals	 	 74 49
	 	
	 306 1,483
	 	
The	 Company	 completed	 a	 refinancing	 of	 its	 UK	 loans	 in	 December	 2009	 with	 an	 advance	 of	 £2	 million.	 These	
funds	 were	 used	 to	 repay	 the	 outstanding	 balances	 with	 Fortis	 Bank.
F. Creditors: amounts falling due after more than one year
 Year	 ended	 31	 December
	 2009 2008
 £’000 £’000
Bank	 loans	 	 1,729 –
Amounts	 due	 to	 Group	 undertakings	 1,952 1,526
	 	
	 3,681 1,526
	 	
Amounts	 due	 to	 Group	 undertakings	 are	 unsecured	 and	 interest	 free.	 The	 subsidiary	 company	 has	 agreed	 not	 to	
seek	 repayment	 of	 the	 amount	 due	 for	 a	 period	 of	 at	 least	 twelve	 months	 from	 the	 balance	 sheet	 date.
 Year	 ended	 31	 December
	 2009 2008
 £’000 £’000
Bank	 loans:
One	 to	 two	 years	 – –
Two	 to	 five	 years	 1,729 –
	 	
	 1,729 –
	 	
In	 December	 2009	 Vero	 Software	 Plc	 entered	 into	 a	 £2	 million,	 5	 year	 secured	 mezzanine	 term	 Loan	 with	 the	 Capital	
For	 Enterprise	 Fund.	 The	 principal	 terms	 of	 the	 loan	 are:
Interest	 of	 12%	 (initially	 10%	 with	 2%	 rolled	 up),	 redemption	 premium	 on	 any	 capital	 being	 repaid	 of	 15%	 if	 capital	
is	 repaid	 before	 the	 third	 anniversary	 of	 completion;	 25%	 if	 capital	 is	 repaid	 on	 or	 after	 the	 third	 anniversary	 of	
completion	 but	 before	 the	 fourth	 anniversary	 of	 completion;	 and	 35%	 if	 capital	 is	 repaid	 on	 or	 after	 the	 fourth	
anniversary	 of	 completion.	 The	 Company	 has	 also	 issued	 warrants	 for	 3%	 of	 the	 fully	 diluted	 share	 capital	 of	 the	
Company	 in	 connection	 with	 the	 loan.
G. Share capital
	 Year	 ended	 31	 December
	 2009 2008
 £’000 £’000
Allotted,	 called	 up	 and	 fully	 paid
37,261,166	 ordinary	 shares	 of	 0.5	 pence	 each
(2008:	 37,261,166	 ordinary	 shares	 of	 0.5	 pence	 each)	 186 186
	 	 V e r o S o f t w a r e P l c
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H. Reserves
	 Share	 Retained
	 premium	 earnings
	 £’000	 £’000
As	 at	 1	 January	 2009	 1,860	 344
Loss	 for	 the	 financial	 year	 –	 (175)
	 	
As at 31 December 2009 1,860 169
	 	
I.  Capital commitments
As	 at	 31	 December	 2009,	 the	 directors	 had	 not	 authorised	 or	 contracted	 for	 any	 capital	 commitments	 (2008:	 nil).
Notes	 to	 the	 financial	 statements
	 A n n u a l R e p o r t a n d A c c o u n t s 2 0 0 9
55
17872	 19/05/2010	 Proof	8
Shareholder’s	 Notes V e r o S o f t w a r e P l c
56
17872	 19/05/2010	 Proof	8
Shareholder’s	 Notes 17872	 19/05/2010	 Proof	8
ITALY
Vero Italia S.p.A
Via Prelle, 30
10090
Romano Canavese (To)
Italy
Tel: +39 0125 717111
E-mail: info@vero.it
Vero Italia S.p.A
Viale San Marco, 38
30020
Marcon (VE)
Italy
Tel: +39 041 5951523
Vero Italia S.p.A
Via Caboto 8b
20025
Legnano (MI)
Italy
Tel: +39 0331 937711
UK
Vero UK Ltd
Hadley House
Bayshill Road
Cheltenham
UK
GL50 3AW
Tel: +44(0)1242 542040
E-mail: info@vero.co.uk
FRANCE
Vero International Software
7 All Ginkgos
69500 Bron
France
Tel: +33 (0) 472793999
E-mail: contact@vero-software.fr
JAPAN
Vero Japan KK
Nihonbashi-Daiichi Bldg. 8F
2-7 Nihonbashi, Odenma-cho,   
Chuo-ku
Tokyo 103-0011, Japan
Tel: +81-(0)3-5847-8950
E-mail: info@vero.co.jp
CHINA
Vero China
Unit 1701, 17F, No.138 Huaihai 
Middle Road,
Shanghai Square,
Shanghai,
China
Tel: +86 21 63756598
E-mail: info@vero-china.com.cn
CANADA
Vero Canada, Inc
5399 Eglinton Ave. West
Suite 301
Toronto (ON)
M9C 5K6
Canada
Tel: +1 416 620 1284
E-mail: info@veroint.com
USA
Vero USA
Suite 210
28345 Beck Road
Wixom MI 48393
USA
Tel: +1 248 869 4040
E-mail: info@veroint.com
10380 Fieldcrest Drive
Suite B
Covington, GA 30014
USA
Tel: +1 678 625 0053
E-mail: sales@peps-cam.com
SMIRTware, Inc
Suite 210
28345 Beck Road
Wixom
Michigan
48393
Tel +1 248 869 4050
Offices
  17872	 19/05/2010	 Proof	8
Vero Software Plc
Hadley House 
Bayshill Road
Cheltenham
Gloucestershire
United Kingdom
GL50 3AW
tel. +44 (0) 1242 542040
fax. +44 (0) 1242 542099
email. info@vero.co.uk
web. www.vero-software.com